MULTIPLEX DEVELOPMENT AND OPPORTUNITY FUND
Product Disclosure Statement 14 SEPTEMBER05 MULTIPLEX DEVELOPMENT AND OPPORTUNITY FUND ARSN 100 563 488 CONTENTS Letter from the Managing Director 1 Summary of Investment 2 Important Dates 3 What Potential Investors need to do 3 Section 1 About the Fund 4 Section 2 Details of the Offer 7 Section 3 Development Process 14 Section 4 Projects 18 Section 5 Multiplex Group 25 Section 6 Risk Factors 28 Section 7 Fees and Expenses 32 Section 8 Additional Information 38 Section 9 Glossary 43 Section 10 How to Invest 45 Application Form Directory Inside back cover
IMPORTANT NOTICES Multiplex Development and Opportunity Fund Important Information This Product Disclosure Statement (PDS) is dated 14 September 2005 and relates to the This PDS contains important information and investors should read it carefully. The offer of Units in the Multiplex Development and Opportunity Fund (ARSN 100 563 488) information in this PDS is general information only. In preparing this document, the (the Fund) by Multiplex Investments Limited (ACN 096 295 233) (the Manager). Manager did not take into account the individual objectives, financial situation or needs An electronic version of this PDS appears on the Manager’s website at of any particular person. Before making an investment decision, investors should www.multiplexcapital.biz. If you receive this PDS in electronic form you are entitled to consider whether the information in this PDS is appropriate to their objectives, financial obtain a paper copy (including the Application Form) free of charge by calling Registries situation and needs. Investors are encouraged to obtain independent financial advice on 1800 766 011. The offer of Units under this PDS is only available to persons before making an investment decision. receiving this PDS (electronically or otherwise) within Australia. This PDS does not constitute an offer or invitation in any place in which, or to any person to whom, it would Information that is not materially adverse information is subject to change from not be lawful to make such an offer or invitation. The distribution of this PDS outside time to time. Updated information will be available on the Manager’s website at Australia may be restricted by law and persons who come into possession of this PDS www.multiplexcapital.biz. Upon request the Manager will provide a paper copy of outside Australia should seek advice on and observe such restrictions. Any failure to any updated information free of charge. comply with these restrictions may constitute a violation of applicable securities laws. Applications for Units can only be submitted on the relevant original Application Form This PDS is intended for use by persons investing directly in the Fund as well as persons attached to and forming part of or accompanying this PDS, or accompanied by an investing indirectly in the Fund through an investor directed portfolio service (IDPS), electronic version of this PDS. IDPS-like scheme such as a master trust or wrap account, or through a nominee or custody service. For investors investing through IDPSs or IDPS-like schemes, references Responsible Entity and Custodian to Unitholders in this PDS are references to the operator or custodian of that service The Manager is the responsible entity of the Fund and the issuer of the Units offered (who holds the Units). under this PDS. The Manager holds Australian Financial Services licence number 241178 and is a wholly owned subsidiary of Multiplex Limited (ACN 008 687 063). The Certain terms used in this PDS have been defined and the definitions are set custodian of the Fund is Multiplex Funds Management Limited (ACN 105 371 917) (the out in the Glossary in Section 9. That Section should be read in conjunction Custodian). The Custodian is not the issuer of this PDS, and makes no representation as with the rest of this PDS. to, and takes no responsibility for, the accuracy or truth of any statement or omission from any part of this PDS. Neither the Manager, the Custodian, Multiplex Group nor their Photographs in this PDS do not represent assets that are directly held by the Fund. associates, directors or members guarantee the success of the Fund, the repayment of capital or any particular rate of capital or income return (other than as set out in Section 2.9). An investment in the Fund is subject to investment and other risks (see Section 6). The Manager has not authorised any person to give any information or to make any representation in connection with the Offer which is not contained in this PDS. No such information or representation may be relied upon as having been authorised by the Manager in connection with the Offer. LETTER FROM THE MANAGING DIRECTOR
Dear Investor,
On behalf of the Manager, it is my pleasure to invite you Multiplex Group is a fully integrated and diversified to become an investor in the Fund. I am also pleased to business with operations in property investment, invite existing Unitholders to make further investments property funds management, facilities and infrastructure into the Fund. management, property development and construction. As at 1 September, 2005 it has a market capitalisation of The Fund invests into a variety of property approximately $2.8 billion. development investments and other direct and indirect property-related transactions. Through returns generated Multiplex has been involved in a number of significant from these investments, the Manager aims to meet or property developments and has an experienced, highly exceed a benchmark pre-tax return to Unitholders of at skilled and well-resourced team of property least 15% per annum, after fees and expenses (refer to professionals, which is recognised for delivering quality Section 3.1). Importantly, Multiplex will have some property developments. involvement in each opportunity into which the Fund I encourage you to read this PDS carefully and, if you invests. It is likely that in the majority of cases, Multiplex have any questions, please contact your financial adviser, will be both a co-investor and development manager. or Registries on 1800 766 011. Advisers can contact the This will ensure that the interests of the Fund and of Manager on (02) 9256 5700. Multiplex are closely aligned. To date, the Fund has invested into developments such as World Square On behalf of my fellow directors, I commend to you an Shopping Centre (Sydney), Jones Bay Wharf (Sydney) investment into the Fund and look forward to welcoming and Southern Cross (Melbourne). Investments as at the you as a Unitholder. date of this PDS include Raffles (Perth), Portside Wharf (Brisbane) and The Chancellor Double Bay (Sydney). Yours sincerely The Fund has a number of features which we believe investors will find attractive. These include: — an 8% per annum income guarantee net of fees and expenses until 30 June 2008 (refer to Section 2.9); and — a $20 million Liquidity Facility (refer to Section 2.14). Ian O’Toole Managing Director Since listing in December 2003, Multiplex has gained access to an increased range of development opportunities across all property sectors both in Australia and overseas. The Manager has been advised by Multiplex that many of these opportunities which exist at the date of this PDS will be offered to the Fund for investment by the Fund. Funds raised under this PDS will be invested into these and other development opportunities.
Product Disclosure Statement 1 SUMMARY OF INVESTMENT
Refer to Section Return objective The objective of the Manager is to maximise returns to Unitholders. The Manager 3.1 aims to meet or exceed a minimum benchmark pre-tax return to Unitholders of 15% per annum, net of fees and expenses. Investments The Fund will invest into property development and other direct and indirect 3.2 property-related transactions. Multiplex involvement Multiplex must have a development role or some other involvement in each 3.2 investment made by the Fund. Minimum initial investment $10,000 and thereafter in multiples of $1,000. 2.3 Multiplex income guarantee of Multiplex will ensure that the Fund is in a position to make pre tax distributions 2.9 return on NAV of 8% per annum on the NAV of the Fund until 30 June 2008, net of management fees and operating expenses. Please note, capital remains at risk. Unit price Calculated in accordance with the Constitution, being a price equal to NAV divided 2.5 by the number of Units on issue. Distribution Generally distribution entitlements to be determined monthly and paid quarterly. 2.7, 2.8 The Fund is subject to tax as if it were a company and therefore makes distributions on an after tax basis. Priority return entitlement The Fund will have a priority entitlement to an agreed development return from 2.10 from Multiplex Developments a Multiplex Development. Split of excess development returns After payment of the priority return, excess development returns on each project 2.11 from Multiplex Developments will be split 50:50 between the Fund and Multiplex. Risk The Fund will make investments in development related projects which, by 6 their nature, carry a higher degree of risk than investments in built and tenanted properties. Funds under management As at 1 September 2005, and based on the assets valued at historical cost, the Fund 1.3 had funds under management of $144.36 million. Redemption rights# When the Fund is liquid, which it is not at the date of this PDS, Unitholders can 2.13 request a redemption of their Units at any time. Liquidity The Manager, in its personal capacity, offers to acquire Units from Unitholders 2.14 seeking to exit the Fund, up to a maximum in aggregate holding by the Manager of $20 million. As at 1 September 2005, the Manager’s holding was worth $4.03 million. Fees Management and other fees are payable by Unitholders. 7 Cooling-off# When the Fund is liquid, which it is not at the date of this PDS, cooling-off rights 8.6 will apply to investments in the Fund. This is a summary only. Potential investors should read the entire PDS prior to making an investment decision.
# The Fund is illiquid as at the date of this PDS. However, the Manager anticipates that there may be periods in the future during which the Fund may become liquid. For the latest information as to whether the Fund is liquid or illiquid, please refer to the Manager’s website at www.multiplexcapital.biz. Redemption rights and cooling-off rights do not apply during any period the Fund is illiquid.
2 Multiplex Development and Opportunity Fund IMPORTANT DATES
Offer opened 10 November 2004 Offer closes No specific closing date as the Fund is open-ended (see Section 2.1) Allotment dates Generally, the first Business Day of each month Distribution payment dates Following the end of each September, December, March and June These dates are indicative only and may change. The Manager reserves the right to close the Offer at any time and without notice. The Manager may, at its discretion, issue Units on a day other than the first Business Day of each month. WHAT POTENTIAL INVESTORS NEED TO DO
Potential investors wanting to participate in this Offer need to complete the following six steps:
1. Read Read this PDS in full paying particular attention to the following: — Important Notices set out on the inside front cover; and — Risks associated with owning Units, set out in Section 6.
2. Consider Consider all risk factors and other information concerning the Fund in light of your investment objectives and circumstances. In particular, consider the unlisted and potentially illiquid nature of the Fund.
3. Consult Consult your financial or other professional adviser before deciding to invest in the Units.
4. Complete Complete the Application Form attached to or accompanying this PDS. If you have any questions on what you need to do call Registries on 1800 766 011. When your Application Form is completed you must pay for your Units by cheque in Australian currency.
5. Application Application amounts must be at least $10,000. Application amounts in excess of $10,000 must 4. amount be in multiples of $1,000. Cheques should be crossed “not negotiable”, and made payable to “MDOF Application Account”.
6. Mail The completed Application Form, together with your cheque, should be returned in accordance with instructions from your financial adviser or mailed to: Multiplex Development and Opportunity Fund C/– Registries PO Box R67 Royal Exchange Sydney NSW 1223
Product Disclosure Statement 3 SECTION ABOUT THE1 FUND
4 Section 1 – Multiplex Development and Opportunity Fund ABOUT THE FUND
1.1 OVERVIEW OF THE FUND AND ITS INVESTMENTS The returns from each of the Fund’s realised investments from its inception date to 1 September 2005 are set out below: The Fund seeks to provide investors with returns in excess of those generally available through an investment in traditional property Return funds that own completed property assets. The Manager aims to Investment on Fund achieve this via investments in a range of property projects at various Project amount ($) investment (%)(1)(2) stages of the development cycle as well as other investments that Jones Bay Wharf, Sydney 2,000,000 37.9 are directly or indirectly related to property. Luna Park Car Park, Sydney 2,500,000 32.5 The Fund will invest into Multiplex Developments and Non-Multiplex Developments (see Section 3.2). Darling Island, Sydney 1,220,000 27.0 Importantly, a decision about whether the Fund will invest into a W1 Industrial Estate, Multiplex Development may only be made with the approval of all the Altona, Melbourne 5,000,000 25.0 independent directors of the Manager. Vale (Stage 2), Perth 5,000,000 24.5 In relation to Non-Multiplex Developments, Multiplex must have Proximity Arncliffe (CSI interest), a development management role or some other involvement in Sydney 1,875,000 22.0 the project. Southern Cross, Melbourne 20,000,000 21.7 As at 1 September 2005, the Fund has invested into 19 projects (see Section 4.1). Investments by the Fund can be made through a variety Latitude Strata Office of structures (see Section 3.6). Investment structures will be (650 George Street), Sydney 3,084,381 20.5 determined on a case by case basis. Luna Park Entertainment and Convention Precinct, Sydney 12,000,000 20.2 1.2 STRUCTURE AND FEATURES OF THE FUND Rhodes, Sydney 5,000,000 20.0 The Fund is an unlisted property development and opportunity unit trust. Multiplex Investments Limited (the Manager) is the responsible King Street Wharf (Stage 3b entity of the Fund and the issuer of the Units offered under this PDS and c), Sydney 8,000,000 20.0 (see Section 8.1 and 8.4). Multiplex Funds Management Limited (the Pittwater Place Mona Vale, Custodian) is the custodian of the Fund and in this role holds the Sydney 10,000,000 20.0 Fund’s assets (see Section 8.12). Latitude Retail and Carpark, From a Unitholders perspective the Fund has some important Sydney 21,915,619 17.5 features which include: Vale (Stage 3), Perth 9,250,000 17.0 — greater liquidity than is often available in relation to direct investments in property developments through the Liquidity The Fund’s investment into Facility (see Section 2.14); Multiplex Development Trust 6,512,023 16.6 — an income guarantee pursuant to which Multiplex will ensure that (1) Represents an annualised figure before tax. the Fund is in a position to make pre tax distributions of 8% per (2) The historical return of the Fund is less than the aggregate of these returns due, in part, to annum on the NAV of the Fund until 30 June 2008. cash held in the Fund from time to time.
1.3 BACKGROUND TO THE FUND AND HISTORICAL PERFORMANCE The Fund was established on 27 May 2002 and, until 5 October 2004, was known as the Multiplex Development Trust II. Since that date, the Fund has been known as the Multiplex Development and Opportunity Fund, which more accurately reflects its investment mandate. As at 1 September 2005, and based on the assets valued at historical cost, the Fund had funds under management of $144.36 million.
Product Disclosure Statement 5 ABOUT THE FUND
The table below sets out the historical performance of the Fund to 1.5 FUND INVESTMENTS 30 June 2005. The Fund’s performance has been calculated as the The investments to be undertaken by the Fund will include, but not gross yield after operating expenses. Importantly, potential investors be limited to, the following: should note that the performance figures exclude any unrealised development profits that were generated in the period since the Fund — a diversified portfolio of traditional property development projects made its original investment in those respective developments. across all property sectors; Therefore, if unrealised development profits were included, the Fund’s performance figures would be higher. — “value-add” opportunities for completed property assets (e.g. a capital expenditure and re-leasing program to add value 1 July 2004 Inception date to a completed property asset); to (May 2002) to 30 June 2005 30 June 2005 — indirect property investments (e.g. provision of mezzanine loan funds into property developments); and Fund performance before tax and after operating expenses (%) 17.46 16.65(1) — any other direct or indirect property-related investments which the Manager considers appropriate given the Fund’s return Fund performance after tax and objective (e.g. retail property syndication projects and operating expenses (%) 12.82 13.09(1) underwriting of property-related fund raisings). Net distribution The Manager may change the investment strategy after giving cents per Unit 10.94(2) 32.55(3) reasonable prior notice to Unitholders. (1) Represents an annualised figure. The Manager will seek to maintain a high number of suitable (2) The level of franking was 100%. investment opportunities to achieve the benefits of investment (3) In some periods pre 30 June 2004, the level of franking was less than 100%. diversification. In doing so, the Manager: As the Fund is taxed as a corporate taxpayer, it makes distributions on an after tax basis, which are able to be franked up to 100%. — will only invest in developments that satisfy the investment criteria described in Section 3.2; To the extent possible, the Manager will attempt to match tax payments to income so as to ensure maximum franking of — will undertake an evaluation and due diligence process in relation distributions. Individuals, complying superannuation funds and to the potential investment; companies receiving distributions will include in assessable income — will seek to ensure that the Fund is substantially invested at all the amounts received and a gross up for imputation relevant to the times; and distribution. In calculating tax payable a credit may be available for the imputation credits attaching to the distribution. — may consider developments with joint venture partners to share risk and increase access to development opportunities. In relation to the information contained in the table set out above, please note that historical performance is no 1.6 UNITS ON ISSUE indication of likely future performance. Further, a number of features of the Fund, including the Fund’s investment As at 1 September 2005, there are 142.14 million Units on issue. All mandate, priority return entitlement and percentage split Units have been issued at NAV per Unit and are fully paid. All new of excess development returns were amended on Units issued pursuant to this PDS will be issued at NAV per Unit and 29 September 2004. will be fully paid. In accordance with the Constitution, the Manager may round the 1.4 INVESTMENT OBJECTIVE application price of a Unit (see Section 2.5). The investment objective of the Fund is to maximise returns to Unitholders through investments in a range of property developments 1.7 BORROWINGS and other investments directly or indirectly related to property, both in There will be no borrowings at the Fund level. However, borrowings Australia and overseas, and across all property sectors. may be made by subsidiaries or sub-trusts of the Fund, or by trusts In line with its objective to maximise returns, the Manager aims to or other vehicles in which the Fund has invested. Any such meet or exceed a benchmark pre-tax return to Unitholders of at least borrowings will not have recourse to any other assets of the Fund, 15% per annum, net of fees and expenses (see Section 3.1). only to the assets of that particular entity.
6 Section 1 – Multiplex Development and Opportunity Fund SECTION DETAILS OF2 THE OFFER
Product Disclosure Statement 7 DETAILS OF THE OFFER
2.1 DETAILS OF THE OFFER 2.6 ISSUE OR TRANSFER OF UNITS Pursuant to this Offer investors may acquire Units in the Fund. The Applicants under this PDS will, at the discretion of the Manager, be Offer does not have a specific closing date. Rather, the Offer remains either issued new Units or transferred existing Units held by the open until the Manager closes it (which it may do at any time and Manager in its personal capacity. Units may be transferred to an without notice at its sole discretion). In the medium term, it is not applicant in circumstances where the Manager has acquired Units envisaged the Fund will close to new investments and therefore, pursuant to the Liquidity Facility – see Section 2.14. existing and new investors are likely to be able to make further The acceptance of an application for Units will be at the absolute investments. Applicants will either be issued new Units or transferred discretion of the Manager. The Manager may reject an application, existing Units held by the Manager – see Section 2.6. in which case, the Manager will refund the application monies, without interest. 2.2 BACKGROUND TO THE OFFER Units will, in general, be issued or transferred, as the case may be, Multiplex has advised the Manager that, as at the date of this PDS, on the first Business Day of the month after the Manager receives it is aware of a range of property development opportunities that the application and cleared application money at the Unit price Multiplex intends to offer to the Fund for investment by the Fund. calculated on the first Business Day of the month. Cleared funds Examples of such opportunities at the date of this PDS are set out received will be held on trust in the applications account until the in Section 4.4. Units are issued. The Fund is entitled to keep any interest The Manager has issued this PDS to raise additional funds which it earned prior to the issue of Units for the benefit of all intends to invest into these development opportunities and other Unitholders. development and property-related opportunities, subject to being The Manager may issue or transfer Units at other times at satisfied that the investment opportunity complies with the its discretion. investment criteria described in Section 3.2. Alternatively, in the event that the Manager elects to transfer existing Units that it has acquired With respect to the issue of Units, the Constitution provides that the pursuant to the Liquidity Facility, then application monies will be paid Manager is entitled to be paid a fee equal to 4% of the application to the Manager in consideration for the money. At the date of this PDS, the Manager intends to charge an Units transferred. application fee of 4% (inclusive of the net impact of GST on the Fund including expected RITCs) of the application money. Therefore, for each $100 invested into the Fund, assuming a NAV per Unit of 2.3 MINIMUM INVESTMENT $1.00, an applicant will receive 96 Units valued at an issue price of The minimum investment amount is $10,000. Additional application $1.00 each. amounts must be in multiples of $1,000. With respect to the transfer of Units from the Manager to an applicant, the Manager is entitled to be paid a purchase fee equal to 2.4 NO MINIMUM SUBSCRIPTION 4% of the value of the purchase price (inclusive of GST). As at the There is no minimum subscription for this Offer. This means that date of this PDS the Manager intends to change the 4% purchase Units will be issued regardless of the level of funds raised pursuant fee. Therefore, for each $100 paid by an applicant to the Manager, to this PDS. assuming a NAV per Unit of $1.00, the applicant will receive 96 Units valued at $1.00 each. 2.5 CALCULATION OF UNIT PRICE In certain circumstances these fees are negotiable (see Section 7.4). The Manager may accept lower fees than it is entitled to receive or The Constitution provides: may defer payment for any period. — that a Unit must only be issued at an application price equal to NAV divided by the number of Units on issue; and — the application price of a Unit may be rounded as the Manager determines. The amount of the rounding must not be more than 1% of the application price. In calculating the NAV, the Manager may determine valuation methods and policies for each category of asset and change them from time to time. Where the Manager values an asset at other than historical cost which, as at the date of this PDS, it intends to do, the valuation methods and policies applied by the Manager must be capable of resulting in a calculation of the application price (or redemption price) that is independently verifiable. Although the Unit price will change over time, it is always calculated in accordance with the Constitution. The Unit price will be updated on the Manager’s website.
8 Section 2 – Multiplex Development and Opportunity Fund 2.7 INVESTOR DISTRIBUTIONS Any amount paid by Multiplex Limited to the Fund under the guarantee will be reimbursed by the Fund to Multiplex Limited from Investors will be entitled to distributions of all income realised by the income of the Fund in subsequent periods. As at the date of this Fund, net of fees and expenses of the Fund (after reimbursement of PDS, the Fund’s contingent obligation to Multiplex Limited is the Multiplex income guarantee). This may differ from reported $4.2 million pursuant to the income guarantee. In the event that income due to relevant accounting standards and the requirement the Manager is replaced as the responsible entity of the Fund by a to report income on a basis other than realisation. company other than a Multiplex subsidiary, the income guarantee Income distributions will, in general, be determined immediately prior in this Section will cease to apply – other than in relation to any to each new issue of Units or the transfer of Units from the Manager reimbursement to Multiplex Limited. – usually on a monthly basis. Distributions will be paid quarterly. The following example sets out the commercial effect of the payment Each Unitholder’s entitlement to the distributable income of the Fund and recoupment of this 8% income return guarantee by Multiplex is proportional to the number of Units they hold at the end of the Limited, assuming the Fund has a NAV of $100 million (and that the relevant distribution period. value of the Fund’s assets does not change). By way of example: Quarter Sep Dec Mar Jun Total Investor A Investor B ($m) ($m) ($m) ($m) ($m) Application received 22 October 5 November Income Realised development Units issued 1 November 1 December project income (before Distribution entitlement November, December December repayment of income guarantee) 3.5001 – 1.0002 13.4003 17.900 Payment by distribution On or before On or before mid February mid February Other Fund income4 0.200 0.200 0.200 0.200 0.800 9.8% per annum net income guarantee Payment of distributions will generally be made within six weeks (comprising 8.0% (and generally within 30 days) following the end of each quarter by guarantee plus MER electronic funds transfer to a nominated bank, building society or of 1.8%) paid by credit union account. Distributions will not be paid by cheque. Multiplex Limited The Manager may elect to determine an income distribution at other to the Fund prior times. For example, if the Manager elected to issue Units on a day to realisation of other than the first Business Day of a month. development projects – 2.250 1.250 – 3.500 If Units are transferred during a Distribution Period, the transferee Total Fund income 3.700 2.450 2.450 13.600 22.200 holding the Units at the end of the Distribution Period will be entitled Expenses to any income distribution in relation to those Units. Management fee at Capital distributions may also be made. Such distributions will be in 1.5% per annum 0.375 0.375 0.375 0.375 1.500 proportion to the number of Units held on the relevant capital Operating expenses distribution date as decided by the Manager. at 0.3% per annum 0.075 0.075 0.075 0.075 0.300
2.8 DISTRIBUTIONS AND REINVESTMENT Fund reimburses Multiplex Limited 9.8% The Constitution provides that the Manager may permit Unitholders net income guarantee – – – 3.500 3.500 to reinvest their distributions to acquire additional Units. The Manager has decided to permit reinvestment, and intends to notify existing Total Fund expenses 0.450 0.450 0.450 3.950 5.300 Unitholders of the procedure for reinvestment. Applicants under this Net (pre-tax) return PDS may elect to participate in the distribution reinvestment plan to the Fund 3.250 2.000 2.000 9.650 16.900 by completing the relevant part of the Application Form – see Assumptions Section 8.14 for details of the plan. If a Unitholder does not (1) September return to the Fund of $3.5 million on investment of $10 million for two years. participate, then that Unitholder’s interest in the Fund would be (2) March return to the Fund of $1.0 million on investment of $5 million for one year. diluted relative to those Unitholders that do participate. (3) June return to the Fund of $13.4 million on investment of $40 million for two years. (4) Represents other Fund income (e.g. interest income). 2.9 MULTIPLEX INCOME GUARANTEE The guarantee is calculated by reference to the NAV of the Fund. It is not a guarantee of the capital value of the Fund. Multiplex Limited has agreed to ensure that the Fund is in a position Therefore, if an investment of the Fund falls in value, the to make a pre tax distribution of 8% per annum on the NAV of the value of Units will fall. The example is not a forecast or indicator Fund until 30 June 2008 net of management fees (including the GST of actual returns. For simplicity, the table does not show investments impact of those management fees) and operating expenses. To the producing ongoing returns, rather just an end realisation. However, extent that income of the Fund does not generate at least an 8% per it may be the case that investments do produce income prior annum distribution in any distribution period, net of fees and to realisation. expenses, Multiplex Limited will ensure that the Fund is put into a position so that it can pay a distribution of that amount.
Product Disclosure Statement 9 DETAILS OF THE OFFER
2.10 PRIORITY RETURN ENTITLEMENT FROM To the extent that an investment in a Non-Multiplex Development MULTIPLEX DEVELOPMENTS results in the Fund earning a return in excess of 16.8% per annum (being 15% per annum net of fees and expenses) the Fund and The Fund will, in relation to Multiplex Developments in which it has Multiplex will share the excess development return along the same invested, have a priority entitlement to an agreed development return lines as those outlined in Section 2.11 in relation to the split of once all development costs have been paid and any funding of those excess returns from Multiplex Developments. costs has been repaid. To the extent that the proceeds realised from a Multiplex 2.13 WITHDRAWAL RIGHTS Development in which the Fund has invested are sufficient to meet all development costs and any funding of those costs has been The options available to a Unitholder to withdraw from the repaid, the Fund will be entitled to the return of the funds it originally Fund will depend on whether the Fund is liquid or illiquid. invested, plus an amount equal to at least 16.8% per annum (being The term “liquid” is defined in section 601KA of the Corporations Act. 15% per annum net of fees and expenses) on the money invested The Fund will be liquid when at least 80% of the value of the assets of in that development for the period of investment, in priority to any the Fund are liquid assets (being assets such as money on deposit with returns that Multiplex may receive. a bank, marketable securities and any other property that the Manager reasonably expects can be realised for market value within 12 months). 2.11 SPLIT OF EXCESS DEVELOPMENT RETURN FROM When the Fund is liquid, Unitholders can request a redemption at MULTIPLEX DEVELOPMENTS any time. The Manager need not give effect to a redemption request For each Multiplex Development, in addition to the priority in respect of Units having an aggregate redemption price of less than development return referred to in Section 2.10, the Fund will be the minimum application amount (being $10,000) or such other entitled to a 50% share of any excess development return over and amount as determined by the Manager from time to time, unless the above the priority return. Multiplex will be entitled to the remaining redemption request relates to the balance of the Unitholder’s holding. 50% for services provided by Multiplex. The Manager will generally seek to meet a redemption request within three months. However, under the Constitution, the Manager has up Assuming a development return of $14 million is realised on an to 12 months to satisfy a redemption request. A redemption of Units investment by the Fund of $10 million into a Multiplex Development will, in general, occur on the first Business Day of a month at the Unit project held for 24 months, the allocation of this return would be price calculated on that first Business Day of the month. as follows: The Constitution provides that a Unit may only be redeemed at a Item ($m) price equal to the NAV divided by the number of Units in issue. The Return to the Fund of its initial investment 10.00 redemption price may be rounded as the Manager determines, however, the amount of rounding must not be more than 1% of the MER of Fund (1.8% x $10 million for 24 months) 0.36 redemption price. The Manager’s website will publish the historical #Priority return entitlement to the Fund at 15% Unit price from time to time. per annum net of fees and expenses The Manager is entitled to receive a fee in respect of the (i.e. 15% x $10 million for 24 months) 3.00 administration costs incurred in redeeming Units. The fee will be the #Development return after MER and preferential greater of 1% of the amount payable upon redemption or $110 return entitlement – 50:50 split between: (inclusive of GST). See Section 7.7 for further information. The the Fund: 0.32 Manager may accept lower fees than it is entitled to receive or may and Multiplex: 0.32 0.64 defer payment for any period. Total 14.00 When the Fund is illiquid, there are no rights of redemption unless the Manager determines to make a withdrawal offer to all # The priority return entitlement and the Fund’s share of the excess development return may, in certain circumstances, be reimbursed to Multiplex Limited pursuant Unitholders. As at the date of this PDS the Manager does not intend to the income guarantee (see Section 2.9). to make any withdrawal offers. In the absence of the Manager making a withdrawal offer, Unitholders who wish to exit the Fund 2.12 PRIORITY DEVELOPMENT RETURN ENTITLEMENT may, subject to its availability, take advantage of the Liquidity Facility AND SPLIT OF EXCESS DEVELOPMENT RETURNS FROM (see Section 2.14). NON-MULTIPLEX DEVELOPMENTS As at the date of this PDS the Fund is illiquid and therefore In relation to each Non-Multiplex Development, the Manager will Unitholders may not elect to redeem their Units. The Manager’s endeavour to negotiate arrangements with the relevant parties to website will be updated regularly as to whether the Fund is liquid ensure that the Fund will have a priority entitlement to development or illiquid. Please note, the Manager anticipates that there may be returns similar to the entitlement outlined in Sections 2.10 and 2.11 periods in the future during which the Fund may become liquid. in relation to Multiplex Developments. Given the wide variety of property and property-related investments the Fund may make, it will not always be possible to negotiate such a priority entitlement for the Fund. The Manager will always bear in mind the Fund’s investment criteria and benchmark return in deciding whether to invest in a Non-Multiplex Development.
10 Section 2 – Multiplex Development and Opportunity Fund 2.14 CAPPED LIQUIDITY FACILITY In circumstances where Units are transferred from the Manager to an applicant, a purchase fee of 4% (inclusive of GST) of the application The Manager, in its personal capacity, offers to acquire Units from money will be charged to the applicant. Please refer to Section 7.3. Unitholders seeking to exit the Fund in accordance with the In most circumstances, an applicant will be in exactly the same following terms. position whether Units are transferred or issued. However, in the case Investors who invest in the Fund through an IDPS or an IDPS-like where Units are transferred and the purchase fee is charged, if the scheme may only use the Liquidity Facility while the Fund is illiquid. applicant is entitled to claim RITCs in relation to the GST on the fee, When the Fund is liquid, investors through an IDPS or IDPS-like the applicant’s net position may be different by virtue of the applicant scheme may only withdraw from the Fund by redeeming Units obtaining the RITCs. If the applicant is transferred Units by the – see Section 2.13. Other investors in the Fund may use the Manager, the applicant should seek professional tax advice in relation Liquidity Facility regardless of whether the Fund is liquid or illiquid. to whether or not they are eligible to claim reduced input tax credits in connection with GST payable in relation to the purchase fee. The price the Manager will pay for a Unit it buys under the Liquidity Facility will be equal to the NAV divided by the number of Units on If the applicant is issued new Units, the Fund (and not the applicant) issue calculated on that first Business Day of the month. Dependent is entitled to the RITCs in connection with the GST on the application upon the length of time a Unit has been held (unless the Unit is held fees. However, the Fund will provide the applicant with the benefit of through an IDPS or an IDPS-like scheme), the Manager will charge expected RITCs in respect of the GST on the application fee. the following administration fee in relation to transfers pursuant to The Manager reserves the right to suspend the Liquidity Facility at the Liquidity Facility: any time should the Manager believe the acquisition of Units by the — Units held for less than three years: 4% of the sale proceeds; Manager may incur stamp duty at a property rate or vendor duty rather than a securities rate in any state or territory. Stamp duty at a — Units held between three years and five years: 2% of the sale property rate is significantly higher than at a securities rate. proceeds; and As at the date of this PDS, the Manager does not expect stamp duty — Units held for greater than five years: no administration fee. at a property rate or vendor duty to apply to such transfers, however, See Section 7.8 for further information. the position could change if there is a change in the nature and location of the Fund’s assets or a change to the relevant laws or the Units on issue as at 1 November 2004 will, so long as they continue application of relevant laws. to be held by the relevant Unitholder as at 1 November 2004, be treated as having been on issue for greater than five years when In the event that the Manager is replaced as responsible entity of the determining the Liquidity Facility administration fee. Fund by a company other than a Multiplex subsidiary, the offer described in this Section 2.14 will cease to apply. The Manager will charge investors who hold their Units through an IDPS or an IDPS-like scheme, a Liquidity Facility administration fee equal to 1% of the sale proceeds of Units sold through the Liquidity 2.15 REDEMPTION RIGHTS AND LIQUIDITY FACILITY Facility, irrespective of how long the relevant Units have been on issue. INTERACTION Purchases through the Liquidity Facility will generally be In the event a Unitholder wishes to exit the Fund, there may be more made on the first Business Day after the end of each than one option available (see Sections 2.13 and 2.14 above), calendar quarter. Withdrawal request forms must be lodged depending upon whether the Fund is liquid or illiquid and whether an with Registries more than 10 Business Days prior to the end investment into the Fund was made through an IDPS or IDPS-type of the relevant calendar quarter. Withdrawal request forms scheme. Unitholders should refer to the Manager’s website to access received 10 or less Business Days prior to the end of the up-to-date information in relation to: calendar quarter will not be processed until the end of the — the most recent Unit price (please note that the Unit price may following quarter. change between the date a redemption or withdrawal is The offer is to be capped at $20 million with the Manager having no requested and the actual date of the redemption or withdrawal); obligation to hold more than this value of Units at any time (i.e. Units — whether the Fund is liquid or illiquid; whose aggregate purchase price is $20 million). As the facility is capped, potential investors should not rely on this facility being — if the Fund is liquid, which it is not at the date of this PDS, the available. The Manager will update its website to advise Unitholders Manager’s estimate of the likely timing to satisfy a redemption whether or not the Liquidity Facility is available. As at 1 September request; 2005, there was $15.97 million available. Where the total — details of the value of Units the Manager will acquire under the applications from Unitholders to use the Liquidity Facility exceed the Liquidity Facility; and available facility (i.e. the applications will result in the Liquidity Facility cap being reached), the available facility will be used to satisfy — information about Unitholders’ rights to choose between having requests made in that quarter on a pro rata basis until the their Units redeemed (see Section 2.13) or transferring their Units $20 million total cap is reached. to the Manager pursuant to the Liquidity Facility (see Section 2.14). Whilst the Manager holds Units (which it does as at the issue date of Alternatively, Unitholders may contact the Manager. this PDS), all new applications for Units will be satisfied by transfer of the Manager’s Units to new investors before any new Units are issued (see Section 2.6). Therefore, applicants under this PDS may be transferred existing Units held by the Manager instead of being issued new Units.
Product Disclosure Statement 11 DETAILS OF THE OFFER
2.16 TERMINATION OF THE FUND complying superannuation fund. Where the comments refer to any amount being included in the cost base of a Unit for capital gains tax The Fund must terminate by no later than 1 March 2082. Unitholders purposes, the amount so included should be net of any reduced input holding at least 5% of the Units can call a meeting to consider an tax credit which the Unitholder received for that amount. extraordinary resolution to wind up the Fund prior to this date. Distributions received from the Fund 2.17 SALE OR TRANSFER OF UNITS For Unitholders who are individuals, complying superannuation funds, Unitholders must comply with the provisions of the Constitution and or companies, a distribution received will be included in assessable the Corporations Act if they wish to transfer any of their Units during income. Where the distribution is partly or wholly franked, the amount the life of the Fund. A transfer of Units must be in writing and signed received will be grossed up to reflect the level of franking. A tax by both the seller and purchaser before it is lodged with the Manager offset equal to the gross-up will be available to offset the tax for registration. otherwise payable on the Unitholder’s taxable income. An individual or a complying superannuation fund will be entitled to a tax refund The Manager is entitled to receive a fee in respect of administration to the extent that the tax offsets exceed the total tax payable on its costs incurred in transferring Units. This fee will be imposed on the taxable income. A company will be able to convert any such excess purchaser of the Units and will be $110 (inclusive of GST). The into an equivalent grossed-up tax loss available for carry forward. Manager may accept lower fees than it is entitled to receive or may A company will also obtain a franking credit in its franking account defer payment for any period. for an amount equal to the gross-up. The Manager will provide assistance to Unitholders to enable them to Sale of Units sell their Units to the extent it is lawfully able to do so. However, Unitholders should note that the Corporations Act places restrictions Where a Unitholder sells Units, a capital gain or loss may arise for on the Manager facilitating transfers of Units between investors. The capital gains tax purposes. The gain or loss would be expected to be Manager does not intend to apply for the Units to be listed on any the difference between: financial market such as the ASX. (i) the sale price; and (ii) the Unitholder’s application monies (where the Units were issued 2.18 TAXATION – THE FUND AND ITS DISTRIBUTIONS to the Unitholder), the Unitholder’s purchase price and purchase The Fund is taxed as a company and therefore distributions are fee (where the Units were transferred to the Unitholder by the made on an after tax basis. Distributions paid by the Fund will be Manager), or the Unitholder’s purchase price plus the transfer fee franked to an appropriate extent having regard to available franking (where the Unitholder purchased the Units from someone other credits. The Manager will provide Unitholders with the appropriate than the Manager). Costs relevant to selling Units (being the documentation showing franking details. It is expected that this will transfer fee or the Liquidity Facility administration fee) may also be done annually, after each 30 June, in respect of all distributions be included. paid in the year ended on that 30 June. Where relevant, individuals and complying superannuation funds may While the Fund is taxed as a company, the precise manner of be eligible to have any gain discounted for capital gains tax purposes application of the franking provisions to the Fund depends on (by one-half and one-third respectively). whether the Fund is treated as a “public company” or a “private Redemption of Units company” under tax law. The Manager expects the Fund to continue to be a “private company”, and the comments in this Section 2.18 If Units are redeemed they will be redeemed at NAV. The redemption are made on that basis. If, however, the Fund is treated as a “public price of a Unit will be treated as disposal proceeds for capital gains company”, it will be necessary for the Manager to approach tax purposes. Certain provisions in the tax law can, in appropriate questions of franking in a different way which will require franking cases, treat part of an amount received upon redemption as an documentation to be issued to Unitholders before or at the time of unfranked dividend. The Manager does not expect those provisions each distribution. to operate in relation to Units in the Fund. The Manager will inform Unitholders if the taxation status of the A capital gain or loss may arise for capital gains tax purposes on a Fund changes. redemption of a Unit, expected to be calculated as the difference between: 2.19 TAXATION IMPLICATIONS OF INVESTING (i) the redemption price; and The taxation information that follows is of necessity general in (ii) the sum of the redemption fee and the Unitholder’s application nature. The tax implications for Unitholders may differ depending on monies (where the Units were issued to the Unitholder), the sum their individual circumstances. In particular, the information may not of the redemption fee and the Unitholder’s purchase price and apply to a Unitholder who is regarded as a trader or who holds Units purchase fee (where the Unitholder purchased the Units from the as part of a business activity. Accordingly, Unitholders are advised to Manager), or the sum of the redemption fee and the Unitholder’s seek professional tax advice in relation to their own positions. This purchase price and transfer fee (where the Unitholder purchased Section is not, and is not intended to be, taxation advice to any the Units from someone other than the Manager). applicant for Units. Imputation benefits (a) Australian resident Unitholders Unitholders will be subject to the same rules as shareholders in The comments in this part (a) assume that a Unitholder is an companies in relation to qualifying for the franking benefits Australian resident for tax purposes and is an individual or company described above. which holds its investment in the Fund on capital account or is a
12 Section 2 – Multiplex Development and Opportunity Fund (b) Unitholders who are not residents of Australia Unitholders who are not residents of Australia for tax purposes will be liable to Australian dividend withholding tax on any part of their distribution which is neither fully franked nor paid out of the Fund’s foreign dividend account. The rate of tax is 15% in the case of residents of most countries with which Australia has double taxation agreements and 30% in the case of residents of countries with which Australia does not have any such agreement. As stated in Section 2.18, the Manager expects the Fund to continue to be treated as a “private company” for tax purposes. Given this, and in the circumstances of the Fund, the Manager will consider it appropriate to wait until after 30 June before franking, in full or in part, the distributions made in the year ending on that 30 June. In consequence, it will be necessary for the Manager to deduct Australian withholding tax, at the rate appropriate for a particular non-resident Unitholder, from all distributions made to that Unitholder at the time they are made. The Manager will account for this tax to the Australian Taxation Office (ATO). Once the distributions for a year ending on a 30 June have been franked to the appropriate extent (which will be done after that 30 June), the Manager will provide documentation to non-resident Unitholders to assist them to seek refunds from the ATO of the excess of the dividend withholding tax deducted and remitted to the ATO on their distributions for the year over the actual amount of their liability to that tax, computed with the benefit of that franking information. The Manager also intends to investigate with the ATO whether streamlined procedures could be put in place to enable such refunds to be issued by the ATO directly to investors without them having to make application, or alternatively whether some other administrative arrangements might be made to avoid the need for full withholding from the distributions when made. If any such revised arrangements are able to be put in place following future discussions with the ATO, the Manager will advise non-resident Unitholders of those arrangements.
2.20 ELECTRONIC PDS A copy of this PDS may be viewed on-line in read-only format on the Manager’s website at www.multiplexcapital.biz. It may also be viewed on the websites of other companies that hold an Australian Financial Services licence. The Offer constituted by this PDS in electronic form is available only to persons receiving the PDS within Australia. Investors who receive a copy of this PDS in electronic form are entitled to obtain a paper copy of the PDS free of charge by contacting Registries on 1800 766 011. On-line applications (if any) must be lodged in accordance with the instructions provided by the provider of the on-line application facility.
Product Disclosure Statement 13 SECTION DEVELOPMENT3 PROCESS
14 Section 3 – Multiplex Development and Opportunity Fund DEVELOPMENT PROCESS
3.1 FUND’S RETURN OBJECTIVE debt investments, underwriting and investments into listed and unlisted property securities. The objective of the Manager is to maximise returns to Unitholders by investing into various property developments in accordance with the The Fund will seek to mitigate its risks by ensuring a spread of investment criteria and strategy set out in Section 3.2. The Manager assets across transaction, geographical, sectoral bounds and aims to meet, or exceed, a benchmark pre-tax return to Unitholders resale/pre-commitment. of 15% per annum, net of fees and expenses. This is not a forecast The Manager may change the investment criteria and strategy by or indication of likely future returns. Rather, it is simply the giving reasonable prior notice to Unitholders of such change. benchmark against which the Manager measures the performance of the Fund. 3.3 PROPERTY DEVELOPMENT 3.2 INVESTMENT CRITERIA AND STRATEGY Property development can be broadly described as the process of acquiring an asset and making changes to it with the objective of The Fund may invest into property development and other direct selling the asset for an amount greater than the total development and indirect property-related investments as further described in costs. Developments can be varied both in terms of size and the this Section. activity undertaken. For example, a piece of land can be acquired As at the date of this PDS, it is anticipated that the Fund will and subdivided into many parcels and sold off individually. predominantly invest into Multiplex Developments. Potential investors Alternatively, a piece of land can be acquired and an office building should note that the Fund is not under any obligation to acquire any constructed on it and subsequently sold. Multiplex Group interest in a development or invest into a Multiplex Construction and property development are two terms that are often Development. Further, Multiplex Group is not under any obligation to confused. This distinction is easily explained by thinking of sell its interest in a development to the Fund or offer investment construction as one aspect of property development. The property opportunities to the Fund. development process includes acquisition, planning and design, No investment will be made by the Fund into a Multiplex construction and finally sale of the completed property. Construction Development unless all of the independent directors of the Manager also takes on greater significance depending on the type of have agreed to the investment proposal. development undertaken. In a land subdivision, construction primarily takes place in the form of earthworks and the physical subdivision of Incorporated into arrangements between Multiplex and the Fund in lots. When building a tower, construction takes on greater importance respect of a particular project, may be a first right of refusal allowing as the planning process is generally more complex than a land Multiplex Group the right, at Multiplex Group’s option, to acquire the subdivision and costs can be significant. asset comprising all or part of that project, at independent valuation. There is a risk that the independent valuation may be less than The property development cycle generally involves the following: market value. — locating a suitable site for development; The Fund may invest into Non-Multiplex Developments. However, — determining if the development is feasible; Multiplex must have a development management role or some other involvement in the project such as the facilities manager or builder. — purchasing the property and arranging finance; Furthermore: — designing a development concept; — no more than 40% of Fund assets (calculated at the time of — applying for relevant authority permits; investment) will be invested in one project; — construction and/or subdivision; — no more than 60% of Fund assets (calculated at the time of — marketing the project; investment) will be invested in the same property sector within the same geographic sector; and — securing tenants (if applicable); and — up to 25% of Fund assets (calculated at the time of investment) — disposal of the property for net proceeds greater than the total may be located in international markets where Multiplex acquisition and development cost. maintains development operations, which include, as at the date The Fund may invest into a property development at any stage of of this PDS, New Zealand and the United Kingdom. As at the date the cycle. of this PDS no offshore investments have been made nor is the Fund considering any offshore investments. 3.4 PROPERTY REPOSITIONING Investment opportunities that satisfy these investment criteria will be presented to the Board of the Manager for its consideration before Properties may become undesirable to both tenants and investors as an investment is made. a result of a range of factors including poor property management, lack of sufficient maintenance, unattractive lease profile or aging The Fund will seek to meet or outperform its 15% per annum (net building services such as security, air conditioning and lifts. Buildings of fees and expenses) benchmark return by maintaining a diversified in this condition are typically under priced and offer an opportunity portfolio of property developments and property-related “value-add” for significant investment gains if they are repositioned. opportunities. The portfolio of investments will typically include the traditional development sectors such as residential, retail, office and By addressing a building’s shortcomings through refurbishment and industrial, but could also include non-traditional sectors such as land other building works plus active property management, it may be subdivision, rezoning, property repositioning opportunities, mezzanine possible to make the property more attractive to investors and tenants. As a result, the value of the property could be enhanced.
Product Disclosure Statement 15 DEVELOPMENT PROJECTS
The techniques used to reposition an asset depend on the type of 3.6 INVESTMENT STRUCTURES property involved. Investments made by the Fund will be structured on a case-by-case In general, repositioning generally involves some or all of the basis. Such structures may include, without limitation: following: — investments through a separate project development vehicle — cosmetic improvement, both internal and external; either partly or fully owned; — revitalising the available space to meet current and prospective — contractual rights; tenants’ accommodation needs; — a development agreement; — improving the utilisation of available space; — direct ownership; — renegotiating leases with tenants so that leases are longer and/or — profit participation or assignment; or at rents reflecting current market value and the improvements made to the property; — equity interest in the developer, the owner or both. — leasing vacant space; Regardless of the investment structure there will be no borrowings at the Fund level - see Section 1.7. — improving the extent to which the building complies with government regulations; and — increasing the lettable area of the building.
3.5 PROPERTY DEVELOPMENT RETURNS It is important to contrast the timing of cash flows in property development with an investment in completed income producing property. Development cash flows are generally irregular with costs being incurred during the initial stages of the development and income in the form of sales received towards the end of the project. In contrast, cash flows from a completed income producing property are generally more regular and often received monthly as they are sourced from rental payments received from tenants. The other distinction is the level of funds sought in property development in comparison to other property investments. Development returns are generally higher than in comparison to potential returns from completed income producing property assets. This is due to the fact that greater risk often exists in property development. The key risk areas are, securing the land, obtaining the nesessary approvals, construction and finally selling the end product to produce the required sales value. These risk factors can be mitigated by careful feasibility analysis and planning together with the skills and experience of a proven development manager.
16 Section 3 – Multiplex Development and Opportunity Fund 3.7 PROJECT EVALUATION AND INVESTIGATION The Manager believes that successful investment management requires a focused, robust process and a competent, professional team backed by strong research. The Manager has a structured approach to risk management, which is achieved by implementing a series of strategies and controls. By way of example, the diagram below depicts a likely investment process. Project evaluation and investigation
Due Diligence Phase Purchase Approval Phase
Multiplex Multiplex Fund’s investment Board of the Manager developments division Group credit committee review committee
Revenue estimate Cost estimate Timing Town planning Site issues
Identify site Preliminary feasibility study Review Final feasibility study Approved
Financial plan Taxation review Discard Discard Legal review
In general, each prospective investment is evaluated to seek to ensure: — optimum employment of the Fund’s capital; — that the most efficient investment period of the Fund’s capital is achieved; — consistency with the Fund’s investment criteria; — investment risks are identified, quantified and a process is put in place to manage them; and — potential conflicts of interest are identified and a process is put in place to manage them. In evaluating prospective investments, the Manager would normally model a range of scenarios in order to test the likelihood of achieving the forecast return. This would involve sensitivity analysis, encompassing market based development parameters, including but not limited to: — market rents and capitalisation rates; — pre-sales and selling periods; and — fluctuations to forecast revenue.
Product Disclosure Statement 17 SECTION PROJECTS4
18 Section 4 – Multiplex Development and Opportunity Fund PROJECTS
This Section sets out information in relation to the investments of the Fund as at 1 September 2005 and potential future investments. This information will change as projects are realised and new investments made, and as new Units are issued pursuant to this PDS. Information on current investments and potential future investments is available on the Manager’s website at www.multiplexcapital.biz. and is updated each month.
4.1 PROJECT ALLOCATION AS AT 1 SEPTEMBER 2005 Project Capital invested Percentage Investment Forecast of portfolio date realisation date ($’000) (%) Arcadia at Tarneit, Melbourne 1,500 1.0 Dec-04 Dec-06 Bluewater Stages 1 to 4, Cairns 11,300 7.8 Jul-05 Sept-07 Bulli, NSW 9,650 6.7 Dec-04 Jul-08 163 Castlereagh Street, Sydney 14,000 9.7 Oct-04 Oct-06 The Chancellor Double Bay, Sydney 5,000 3.5 Dec-03 Dec-05 Cotton Beach Casuarina, Northern NSW 8,300 5.7 Apr-05 Oct-07 Ettalong, NSW Central Coast 5,050 3.5 Dec-03 Oct-05 King Street Wharf Site 1, Sydney 10,000 6.9 Jun-03 Dec-07 Lakelands, Stage 4 (Apartments), Gold Coast 4,700 3.3 Jun-05 May-07 Lakelands, Stage 3 (Villas), Gold Coast 2,170 1.5 Apr-05 June-06 Latitude East (Site C), Sydney 12,500 8.7 Jun-04 Mar-07 Multiplex Development Trust (Fund’s investment into Raffles Perth) 1,546 1.1 Jun-03 May-06 Nedlands Park Hotel, Perth 13,850 9.6 Jul-05 May-07 Newport Quays, Stage 1, Adelaide 3,645 2.5 Dec-04 Sept-07 Portside Wharf, Brisbane 10,000 6.9 Dec-04 Sept-06 Raffles, Perth 3,643 2.5 Jun-03 May-06 Rhodes (40 Walker Street), Sydney 5,900 4.1 Dec-04 Nov-08 Vale Syndication Stages 2 to 6, Perth 15,000 10.4 Jun-05 Jun-09 Walsh Bay Moorings Pier 8/9, Sydney 1,100 0.8 Apr-05 Mar-06 Cash 5,511 3.8 Total 144,365 100.0
Product Disclosure Statement 19 PROJECTS
Description of projects as at 1 September 2005 Bulli, NSW: The site is located in the northern suburbs of Wollongong on the Sydney coastal escarpment, offering spectacular The Fund has an interest in the development activities associated ocean views. Conceptual designs for the 54 hectare site allows for a with the following projects. The Fund’s exposure is generally obtained variety of housing lot sizes, ranging from 300 square metre to over through contractual arrangements entered into with companies in the 1,200 square metres. Multiplex Group. The Fund does not usually have a direct interest in the land. Some of the pictures in this Section are artist impressions 163 Castlereagh Street, Sydney: An amalgamation of five sites of the completed projects. with frontage to Castlereagh and Pitt Streets in the heart of the Sydney CBD to comprise ground floor retail and upper levels with Arcadia at Tarneit, Melbourne: Subdivision of Sayers Road, a potential mix of commercial and residential apartments. Tarneit, a 14.78 hectare, 174 lot residential subdivision located approximately 25 kilometres to the west of Melbourne’s Central The Chancellor Double Bay, Sydney: 13 luxury residential Business District. apartments above five retail outlets on the ground floor that is anticipated to attract a mix of boutique retailers. All apartments will Bluewater, Stages 1 to 4, Cairns: Blue Water comprises a have three bedrooms and three bathrooms. 173 hectare site close to Trinity Beach, Cairns. It is proposed to develop the land into approximately 670 lots incorporating a Cotton Beach, Casuarina, Northern NSW: Casuarina is a seaside 10 hectare central lake and parkland. There is a significant amount township located 3.5 kilometres south of Kingscliff on the Tweed of existing rainforest on the site, which will create a unique form of Coast in Northern New South Wales. Cotton Beach at Casuarina development with the need for architecturally designed pole homes. fronts a stunning white sand beach. Stages 1 to 4 will comprise a total of 305 residential lots which will Overall, Cotton Beach will consist of 470 beachfront apartments, include lakeside lots and rainforest lots – both of which will be beach houses and poolside villas set across eight hectares of marketed as premium product. beachfront land. The Fund is invested into stage one of Cotton
Arcadia at Tarneit, Melbourne
163 Castlereagh Street, Sydney
Bluewater, Stages 1 to 4, Cairns
The Chancellor Double Bay, Sydney
20 Section 4 – Multiplex Development and Opportunity Fund Beach. Stage one consists of 129 deluxe beachfront apartments Lakelands, Stage 4 (Apartments), Gold Coast: Lakelands designed by Multiplex Living to showcase contemporary beachside Signature Living is a boutique masterplanned community located on Australian architecture. the Gold Coast, Queensland. The property is located within the grounds of the Lakelands Golf Club, Australia’s only Jack Nicklaus Ettalong, NSW Central Coast: The development comprises Club designed golf course. The Fund has invested into Stage 4 of premises and a four-star hotel/serviced apartment resort complex. Lakelands Signature Living. Stage 4 will comprise 53 two and three The ground floor Club facilities include eateries, restaurant and bars, bedroom apartments in two buildings. gaming room, conference facilities and entertainment lounge. The hotel/serviced apartment resort comprises a combination of studios, Lakelands, Stage 3 (Villas), Gold Coast: The Fund has also one, two and three bedroom serviced apartments and a health club. invested into Stage 3 of the project. Stage 3 consists of The apartments are arranged in a stepped form with water views 20 architecturally designed villas that each boast three bedrooms across Brisbane Waters to Lion Island and Palm Beach. and a media room/study, soaring ceilings and expansive balconies. Each ranges in size from 420 to 440 square metres, including a King Street Wharf Site 1, Sydney: This forms part of the mixed 90 square metre al fresco area, ideal for outdoor entertaining. use development of Darling Harbour Wharves 9 and 10 on the western edge of the Sydney CBD. Development of Site 1 will Latitude East (Site C), Sydney: This is the final component of the comprise the Dupain Building, a 15-storey commercial strata office World Square redevelopment in Sydney’s CBD. The project comprises building containing 34 strata office suites and the Phoenix Building, a a mix of strata commercial office, apartments designed around 13-storey residential building containing 194 apartments and “home office” use and a residential tower. 28 home office suites.
Cotton Beach, Casuarina, Northern NSW
King Street Wharf Site 1, Sydney
Lakelands, Gold Coast Ettalong, NSW Central Coast
Product Disclosure Statement 21 PROJECTS
Multiplex Development Trust (MDT), (Fund’s investment in Portside Wharf, Brisbane: “Portside Wharf” is a major waterfront Raffles Perth): On 24 September 2003, a meeting of MDT development designed to accommodate the Brisbane International unitholders agreed to wind up MDT. Investors were provided with the Cruise Ship Terminal together with 381 prestige residential option to either transfer their existing units in MDT for new Units in apartments and extensive retail/commercial areas. The residential, the Fund or receive a cash payment for the value of their MDT units. commercial and retail components of the development are contained For those investors who elected to receive Units in the Fund, those within eight buildings and will be undertaken in three stages. Units were issued on 30 January 2004. From this date, the Fund The first stage comprises: the cruise ship terminal; a retail and became the sole Unitholder of MDT. As at the date of this PDS, MDT commercial complex, the “Loft” building which will include a held an interest in Raffles, Perth. restaurant, five apartments and two residential apartment buildings; Nedlands Park Hotel, Perth: Development of Nedlands Park Hotel “Infinity” featuring 63 apartments and “Flare” featuring into a mixed use residential development comprising 96 apartments. The Fund has invested into the Flare and Infinity 38 luxury apartments, 8 residential lots and a number of residential buildings. commercial/retail units and a restaurant/bar facilities. All apartments Raffles, Perth: A redevelopment of the heritage-listed Raffles hotel will have river views. in Applecross, Perth. The development will contain 116 luxury Newport Quays, Stage 1, Adelaide: The project, known as apartments within a 17 level tower and two five-level residential Newport Quays, is a major mixed use redevelopment of the wings. The project also involves the refurbishment of the existing waterfront land around the inner harbour of Port Adelaide. The Fund Raffles hotel into a retail and commercial precinct. The development is invested into Stage 1 of the project which comprises captures panoramic views of the Swan River and Perth CBD to the 126 apartments and 61 townhouses. Pre-selling commenced in north and east and views of the Canning River to the south. mid August 2005 and buyer interest has been strong.
Latitude East (Site C), Sydney Newport Quays, Stage 1, Port Adelaide
Portside Wharf, Brisbane Nedlands Park Hotel, Perth
22 Section 4 – Multiplex Development and Opportunity Fund Rhodes (40 Walker Street), Sydney: Multiplex has formed a joint Walsh Bay Moorings Pier 8/9, Sydney: The proposed venture with Trafalgar Corporate to remediate and develop the development involves construction of a marina facility to berth up to harbourfront site at Rhodes, adjacent to the Olympic precinct, into 15 private vessels. The size of the berths will predominantly a major new residential estate. The project received remediation accommodate vessels of 14.5 metres and will include two berths consent early in May 2005 allowing the remediation works to that are able to accommodate vessels of 17.6 metres in length. commence. Remediation will be delivered in three stages over a The facility is located at Walsh Bay, on the northern fringe of the period of approximately three and a half years. The site has a Sydney Central Business District. Development approval was received masterplan development consent for 1,250 dwellings over eight in June 2005. super lots. Vale Syndication Stages 2 to 6, Perth: Vale is a masterplanned community located 25 km from the Perth CBD. Stages 2 to 6 comprise 1,564 residential lots and 7 commercial lots. This development is being syndicated into the Multiplex Acumen Vale Syndicate. Approval has been given for Stages 2 to 5 of the project and subdivision for 473 residential lots. Development works on the property have commenced, with 286 of the total 404 lots already sold in Stage 2. The Fund invested $15 million into the syndicate (50% of the required syndicate equity), with distributions forecast to commence in December 2007 and a completion date of June 2009.
Walsh Bay Moorings Pier 8/9, Sydney Rhodes (40 Walker Street), Sydney
Vale, Perth
Product Disclosure Statement 23 PROJECTS
4.2 GEOGRAPHIC ALLOCATION OF THE FUND’S ASSETS AS Cottesloe Apartments, Perth: Redevelopment of the Cottesloe AT 1 SEPTEMBER 2005 Hotel comprising premium residential apartments, hotel/bar and café/restaurant and car parking. The majority of the apartments 3% 4% SA Cash will have ocean views. South Fremantle Beachfront Apartments, Fremantle: 20% Development of 2.40 hectares of waterfront land in Fremantle, QLD Western Australia comprising approximately 104 dwellings for residential use. 1% VIC City Square, Perth: The Westralia Square site at 123 to 137 St George’s Terrace is located in the CBD core and is 23% approximately 15,550 square metres in area. The site has frontage WA to Mounts Bay Road, includes four heritage listed buildings and benefits from existing improvements including a circa 1,000 car 49% basement excavation and foundations. Construction of a carpark NSW and retail centre is anticipated to commence by late 2005. This geographic allocation will change from time to time as East Quarter, Hurstville, Sydney: Development of 629 investments are realised and new investments are made. apartments with some commercial and retail components to be The Manager will update this information on its website. completed over three stages. The site is in close proximity to transport and a commercial district. 4.3 SECTOR ALLOCATION OF THE FUND’S ASSETS AS AT King Street Whart Stage 3B, Sydney: A commercial 1 SEPTEMBER 2005 development of 13,396 square metres, in the heart of the King Street Wharf precinct. 1.8% Office – NSW 1.0% As at the date of this PDS, Multiplex has not formally offered any of Residential – VIC the investments listed above to the Fund and the Manager has not 1.3% determined whether the above investment opportunities satisfy the 2.5% Retail – NSW investment criteria set out in Section 3.2. Residential – SA 0.8% 3.8% Tourism and Hotel Leisure – NSW Further, any investment by the Fund into a Multiplex Development Cash 0.3% would only occur if all the independent directors of the Manager 5.8% Car Park – NSW agreed to the investment. Therefore, the Fund may not invest into Strata Office – NSW these developments. 7.8% Broadacre Land – QLD Investors should be aware that: 10.4% 28.8% — the Fund is under no obligation to invest into a Multiplex Broadacre Residential – NSW Development, nor is Multiplex under any obligation to Land – WA offer development investments to the Fund; and 10.8% 13.2% Broadacre Residential – WA — the Fund may invest into Non-Multiplex Developments, Land – NSW however, Multiplex must have a development 11.7% management role or some other involvement in Residential – QLD the project.
This sector allocation will change from time to time as investments are realised and new investments are made. The Manager will update this information on its website.
4.4 POTENTIAL FUTURE PROJECTS AS AT THE DATE OF THIS PDS Multiplex has advised the Manager that, as at the date of this PDS, it is aware of the following potential Multiplex Development investment opportunities which it intends to offer to the Fund for investment by the Fund. Multiplex is under no obligation to offer these investment opportunities to the Fund, however, if they are offered the Manager intends to consider these investments.
24 Section 4 – Multiplex Development and Opportunity Fund SECTION MULTIPLEX5 GROUP
Product Disclosure Statement 25 MULTIPLEX GROUP
5.1 MULTIPLEX GROUP Ian O’Toole, Managing Director – Multiplex Capital Multiplex Group is a fully integrated and diversified business, listed Ian is Managing Director of the property funds management division on the Australian Stock Exchange and employing over 2,000 people of the Multiplex Group which is referred to as Multiplex Capital. across four divisions – property development, construction, property Ian was formerly with ING Real Estate Asset Management Limited funds management and facilities and infrastructure management. as Director – Property, where he was responsible for the capital Multiplex Group has offices located throughout Australia along transactions and asset management of ING Industrial Fund and with offices in the United Kingdom, New Zealand and the United ING Office Fund. Ian has over 23 years’ experience in funds Arab Emirates. management and real estate. Multiplex was founded in 1962 and has grown strongly and Rob Rayner, Divisional Director – Funds Management resiliently over four decades through a number of different property Rob has responsibility for the day-to-day operation and development and economic cycles. Multiplex’s strong track record has given it an of Multiplex Capital’s property funds management activities. Rob has established brand with a reputation for quality, innovation and been involved in property and property funds management for more successful delivery of major projects – particularly large commercial, than 16 years and has extensive property and financial experience in residential, retail and specialist design and construct projects. As at both the listed and unlisted sectors of the funds management 1 September 2005, the market capitalisation of the Multiplex Group industry. was approximately $2.8 billion. This experience has been gained through his previous employment Multiplex Developments within the Armstrong Jones (now ING Real Estate Investment Multiplex is one of Australia’s largest and most diversified property Management Limited) unlisted and listed property trust business, developers. Over the past decade, Multiplex has progressively where he managed total property assets exceeding $500 million. increased its participation in property development and has Dr Peter Morris, Independent Director undertaken a range of projects as a sole developer or in joint venture arrangements. The property development division of Multiplex Peter is a recognised leader in the development and project comprises a team of experienced personnel with expertise in key management field having played a major role in the growth of areas of development, including project identification, feasibility professional project management as a specialist skill in Australia. analysis, design, finance, legal and marketing. Peter’s specialist skills are in the areas of establishing project delivery strategies, top level negotiation and the management of The division derives a powerful competitive advantage from multi-stakeholder, high profile projects, management of major Multiplex’s integrated property approach. In particular, the close projects, strategy determination, financial assessment and feasibility relationship with the construction division gives the property studies, design management and review and development development division access to quality construction advice. management. As at 1 September 2005, the property development division of Peter is a non-executive director of Galileo Funds Management Multiplex had current work in hand of $2.7 billion. Limited, the responsible entity of Galileo Shopping America Trust, a listed property trust owning retail assets in the USA. 5.2 MULTIPLEX CAPITAL Robert McCuaig, Independent Director “Multiplex Capital” is the property funds management division of the Multiplex Group. Multiplex Capital includes the Manager (Multiplex Robert is Chairman of the Advisory Board of Colliers International Investments Limited), Multiplex Capital New Zealand Limited, Acumen Property Consultants in Australia. Along with David Collier, he formed Capital Securities Limited, Multiplex Capital Limited, Multiplex McCuaig and Collier, which in 1988 became the New South Wales Property Funds Management Limited, Multiplex Investment Funds office of Colliers International. He was a forerunner in the Pty Ltd and Multiplex Funds Management Limited. Collectively establishment of Colliers in Australia on a global basis, now one Multiplex Capital has assets under management of over $5.5 billion of the world’s largest professional property services group with as at 1 September 2005. 215 offices throughout Australia and the Asia Pacific, Europe, the Middle East, the Americas and Africa. 5.3 DIRECTORS OF THE MANAGER He has acted as property adviser to the University of Sydney, Westpac, Qantas Airways, Presbyterian Church, Sydney Port Andrew Roberts, Executive Chairman Authority, Benevolent Society of NSW, the State of New South Wales Andrew is Managing Director and Chief Executive of Multiplex. During and the Commonwealth of Australia. Robert is a director of more than 20 years with Multiplex, Andrew has been directly involved St Vincents and Mater Health Sydney and a member of the Salvation in all operations of the business. Through his position as Managing Army Advisory Board. Director and Chief Executive, Andrew provides strategic and managerial leadership for the Multiplex Group executive team. Andrew is a director of Danae Resources NL, Greenwich Resources plc (a company listed on the London Stock Exchange), a director of Burswood Limited and a Board member of the University of Western Australia Business School. Andrew also serves as a director of MTM Funds Management Limited (responsible entity of MTM Entertainment Trust).
26 Section 5 – Multiplex Development and Opportunity Fund Mike Hodgetts, Independent Director Mike was responsible for the management of Rider Hunt both in Perth and Sydney and was Group Chairman of Rider Hunt from 1992 to 1996. He was National President of the Australian Institute of Quantity Surveyors from 2001 to 2003. Mike is currently a director of the peer group body the Australian Construction Industry Forum. As a senior professional consultant he has extensive experience in development and construction, particularly in non-residential projects.
5.4 SENIOR MANAGEMENT Leon Boyatzis, Fund Manager Leon has over 15 years experience in financial analysis in the investment banking and property sectors. Leon commenced his career as a taxation consultant in an international accounting firm and has worked in major investment banks in London concentrating on derivative risk analysis. On returning to Australia, Leon headed up the research division of a stockbroking firm before concentrating his financial analysis skills in the property industry. He has been involved in a number of major property developments as well as overseeing the performance of significant property funds. Leon is a qualified Chartered Accountant and has completed a Master of Property.
Product Disclosure Statement 27 SECTION RISK FACTORS6
28 Section 6 – Multiplex Development and Opportunity Fund RISK FACTORS
Returns from property developments are influenced by a number of risk factors, some common to all property investments and some unique to the development of the particular property. The following table sets out some of the risks associated with investing in property developments and other investments directly or indirectly related to property. Such investments, by their nature, carry a higher degree of risk than investments in built and tenanted properties. The table also sets out how the Manager believes those risks can be managed having regard to the objectives of the Fund. When assessing an investment, the Manager will take into account various risks in light of likely returns. The way in which the Manager deals with risk will be determined on a case-by-case basis for each investment. After investigation and consideration of the risks and benefits of a proposed investment, the Fund may accept such risks. As with all investments of this nature, there is a real risk that Unitholders will not receive all of their capital upon redemption or transfer of their Units, or upon winding up of the Fund. Risk Risk management Planning Planning approvals for developments may be delayed or denied Planning approvals may be a condition precedent to the Fund committing thereby slowing or preventing developments. Further, they may not capital to a development. However, the Fund may undertake an be granted in the form anticipated. investment where the planning approval is yet to be obtained, including in circumstances where the Manager is satisfied of the risk, the fact the return to the Fund may be increased for taking risk or where the developer may to some extent share the risk.
Environmental Environmental issues such as land contamination may delay or Due diligence procedures will be adopted to attempt to identify significantly increase the cost of developments. environmental issues in advance. The relevant arrangements may either require the issue to be resolved prior to commitment of funds or for the developer to assume or share the environmental risk. However, the Fund may bear environmental risk in circumstances where the Manager is of the view that this is appropriate.
Industrial relations Industrial disputes may delay completion of developments or increase The cost of delays due to industrial disputes will in many circumstances the cost of a project. be allocated in large part to the builder under the building contract. However, there may be circumstances in which the Fund bears this risk where the Manager is of the view that this is appropriate.
Inflation and escalating construction costs Higher than expected inflation rates generally, or increases in prices The construction cost allowance included in the development feasibility in a particular building sector, may increase construction costs. would normally be subject to an independent confirmation by a quantity surveyor as to reasonableness. The relevant arrangements may require the developer to bear the risk of costs exceeding that agreed in the feasibility assessment. However, the Fund may bear such risks in certain circumstances where the Manager is of the view that this is appropriate.
Delivery Completion (delivery) of a development may be delayed due to Much of the time risk in a project will usually be allocated to the builder. unforeseen circumstances which may result in increased costs and To the extent this is not the case this is a development risk that may be lower returns on an investment. borne by the Fund in circumstances where the Manager is of the view this is appropriate. It may in part also be borne by the developer.
Property market risks Increase in supply or fall in demand in any of the sectors of the Prospective developments will be evaluated having regard to the impact property market in which the Fund is invested and reduction that property market risks may have on the level of return that will be in market rent levels could adversely influence the value of generated. Property market risk may be reduced through a requirement investment property. to achieve pre-agreed levels of leasing and pre-sales. However, this will not be the case in all investments undertaken by the Fund. This risk will be mitigated by sector and geographic diversification of the Fund’s investments.
Product Disclosure Statement 29 RISK FACTORS
Risk Risk management Third party failure Tenants committed to a development may become insolvent or Due diligence investigations coupled with suitable third party obligations otherwise default in their obligations on completion. There is a risk (where appropriate) should allow the Manager to identify, assess and that the property may not be able to be re-let at the same rental. manage these risks. Where properties are developed in joint venture or with other parties, disputes over partner defaults and property strategy may arise. Contractual counter-parties (which include Multiplex) may default on their obligations to the Fund thereby leading to a capital loss or a reduction in income.
Interest rates Increases in interest rates may affect the availability or cost The relevant arrangements may require the developer to bear the risk of of borrowings. interest costs exceeding that agreed in the feasibility assessment. In any event, to mitigate this risk the Manager will generally ensure appropriate contingency allowances for interest rates are built into the feasibility assessment.
Variations Variations to construction specifications can significantly increase the Where variations arise as a result of the developer changing the construction cost. specification, the cost of the variations may be to the developer’s account. However, they may be to the Fund’s account, usually in circumstances where the Manager is of the view that the variations should give rise to increased revenue.
Inability to sell the development on completion The inability to sell the development at the projected sale price The relevant arrangements may require costs to be paid on the earlier of and/or within the projected sale period will result in higher holding sale or a specified period, ensuring there will be no forced sale. However, charges reducing the return on the development or could result in in certain circumstances, the Fund may bear the risk of holding costs the development making a loss. There is a risk that purchasers exceeding those anticipated. ultimately default in the performance of their contracts. The income stream that should potentially flow from the property on completion should mitigate the Fund’s holding costs. While it will be usual that non-refundable deposits paid by purchasers would be retained, it is possible that the property in question may not be able to be re-sold for the same purchase price.
Changes in the law or government policy Changes in income tax, indirect tax or stamp duty legislation or The relevant arrangements may require the developer to bear the risk policy, particularly with regard to property development and that these changes will have on the cost of the development. However, investment activity, may affect the Fund’s returns. Such changes can this is a risk borne in all business dealings by each party to a transaction. result in the distribution policy of the Fund having to change. As such the Fund is likely to be exposed to these risks. As changes in revenue law or policy and other legal or regulatory changes often cannot be foreseen, the Manager will attempt to anticipate or respond to any such changes in whatever manner seems practical and in the interests of Unitholders.
Taxation The Fund is subject to Australian tax legislation and the legislation of The Manager seeks the services of external taxation professionals with governments in countries where the Fund may invest. To the extent specific experience in taxation matters that relate to the Fund and that legislation or administrative practice changes in a jurisdiction its investments. this may impact on the returns to Unitholders.
30 Section 6 – Multiplex Development and Opportunity Fund Risk Risk management Conflict of interest and arm’s length transactions As at the date of this PDS it is anticipated that the Fund will primarily As at the date of the PDS the Board consists of six directors, three of invest in Multiplex Development opportunities. As such it is possible which are independent to Multiplex. No investment will be made into a that from time to time conflicts of interests may arise between the Multiplex Development unless all of the independent directors have interest of the Fund and those of Multiplex. agreed to the investment proposal. Multiplex may default on its obligations to the Fund in relation to The investment management process of the Manager is supported by Multiplex Developments, non-Multiplex Developments and other guidelines and procedures for both identifying and dealing with related obligations to the Fund. party transactions. These guidelines and procedures have been prepared by external legal advisers to the Manager and take into account the Incorporated into an investment proposal by Multiplex may be a first Corporations Act provisions dealing with related party transactions. right of refusal allowing Multiplex Group the right, at Multiplex Group’s election, to acquire the asset comprising all or part of that project at independent valuation. There is a risk that the independent valuation may be less than market value.
Insurance From time to time, various factors may influence premiums to a The Manager will seek to identify the significant risks involved in an greater extent than those forecast, or in some circumstances, investment and, where practical and affordable, may mitigate that risk policies may not cover an event. In this case, the result may in turn through the engagement of specialist insurance underwriters who are have a negative impact on the net income of the Fund’s return. engaged to seek the most appropriate insurance solution.
Foreign exchange Investments held outside Australia may be subject to movements in The Manager will seek to minimise the impact of currency fluctuations on foreign exchange. In some cases, these movements may have a the Fund’s income by employing a hedging strategy where appropriate. negative impact on the net income of the Fund. In essence, a weaker Due to the uncertainty of investment completion, particularly where Australian dollar will result in the value of investments held in foreign property development investments have been made, it may not be currencies increasing in value. Conversely, if there is an upward possible to hedge the capital employed. movement of the Australian dollar against the foreign currency in which an investment is held, the value of the assets held in the foreign currency will fall.
Due diligence Failure of due diligence investigations to identify potential risks. When making an investment, the Manager may engage appropriate experts to investigate the environmental, structural, taxation and legal aspects of investments. The Manager will seek to engage experts who are widely regarded for their specialist knowledge in the areas in which the Fund seeks advice. Despite such investigations, the Manager cannot guarantee the identification and mitigation of all risks associated with investments by the Fund.
Other risks Force majeure events, which are events beyond the control of a party, including fire, flood, earthquake and other acts of God, terrorist attacks and war may affect a party’s ability to perform its contractual obligations or may lead to a capital loss or a reduction in income. Multiplex is under no obligation to offer future investment opportunities to the Fund. There is a risk that Multiplex may not secure further developments or alternatively, may not offer investment opportunities to the Fund. As disclosed in Section 2.14 the Liquidity Facility is capped at $20 million and therefore potential investors should not rely on it being available. As at 1 September 2005 there was $15.97 million available.
Product Disclosure Statement 31 SECTION FEES AND7 EXPENSES
32 Section 7 – Multiplex Development and Opportunity Fund FEES AND EXPENSES
7.1 FEE TABLE This table shows fees and expenses that may be charged to the Fund and to Unitholders. The Manager may accept lower fees than it is entitled to receive or may defer payment for any period. Where payment is deferred, the fees accrue daily until paid. Potential investors should carefully read all the information about fees and expenses, as it is important to understand their impact on an investment in the Fund. Type of fee Amount How and when paid Fees when a Unitholder’s money moves in or out of the Fund Establishment fee: This is a fee to set up an initial Nil Not applicable. investment.
Application fee1: This is a fee for the initial and every The net impact of the GST inclusive fee taking The GST inclusive fee is payable to the Manager subsequent issue of Units to a into account expected RITCs is 4% of the from the Fund. The amount will be deducted from Unitholder.4 application money or value of the property being the amount of a Unitholder’s application monies transferred (e.g. $400 per $10,000 when the Manager determines the number of Units investment). to issue the Unitholder. The application fee may be negotiable.3
Purchase fee2: This is a fee the Manager charges a The GST inclusive fee is 4% of the value of the Payable to the Manager by the Unitholder. The fee Unitholder every time the Unitholder purchase price or the value of the property will be deducted from the amount of a Unitholder’s purchases Units from the Manager.4 being transferred (e.g. $400 per $10,000 purchase monies when the Manager determines the investment). number of Units to transfer to the Unitholder. The purchase fee may be negotiable.3
Transfer fee5: This is a fee charged for transferring Fee of $110 (GST inclusive) per transfer. The GST inclusive transfer fee is payable by the Units. It does not include a transfer of purchaser to the Manager directly. The Manager will Units to or from the Manager in not register a transfer of Units until the transfer fee connection with the Liquidity Facility. is paid.
Redemption fee6: This is a fee for each redemption of The GST inclusive fee is the greater of 1% of The Manager will deduct the GST inclusive Units a Unitholder makes. the redemption proceeds or $110. For example, redemption fee from the redemption proceeds. if a Unitholder redeems $1,000 of Units, the GST inclusive fee will be $110. If a Unitholder redeems $10,000 of Units, the fee will be $110.
Liquidity Facility administration fee7: This is a fee for using the Liquidity The GST inclusive fee is 4%, 2%, 1% or 0% of The Manager will deduct the Liquidity Facility Facility by selling Units to the Manager. the proceeds of selling the Units to the administration fee from the sale proceeds. Manager. For example, if a Unitholder transfers 10,000 Units to the Manager (assuming a NAV per Unit of $1.00) the Unitholder will be charged a fee of $400, $200, $100 or $0.
Product Disclosure Statement 33 FEES AND EXPENSES
Management costs Management fee8: This fee is payable to the Manager for The net impact of the GST inclusive fee taking The GST inclusive fee is payable monthly in arrears managing the Fund. into account expected RITCs is 1.5% per from the Fund and calculated on the value of the annum of the value of the assets of the Fund assets at the end of the calendar month. (e.g. $150 per $10,000 of Unit value per annum).
Expenses9: These are expenses incurred by the Up to 0.3% per annum of the NAV of the Fund Repayable to the Manager as they are incurred on Manager in relation to the proper (e.g. $30 per $10,000 of Unit value). an ongoing basis by the Fund. Expenses above 0.3% performance of its duties in respect of per annum will be borne by the Manager. the Fund.
(1) See Section 7.2. (6) See Section 7.7. (2) See Section 7.3. (7) See Section 7.8. (3) See Section 7.4. (8) See Section 7.9. (4) See Section 7.5. (9) See Section 7.10. (5) See Section 7.6.
7.2 APPLICATION FEE The Manager may accept a lower fee or may defer payment for any period. Unless otherwise negotiated between a Unitholder and the Manager (see “Fees that are negotiable” in Section 7.4), every investment in Units under this PDS will be subject to either an application fee or a 7.4 FEES THAT ARE NEGOTIABLE purchase fee. The application fee only applies where new Units are The Manager may negotiate different fees or rebates of fees with issued to an investor. In these circumstances the purchase fee any investor who is a “wholesale client” as that term is defined in (discussed in Section 7.3) does not apply. section 761G of the Corporations Act. The Manager may, in respect The Manager is entitled to be paid an application fee of 4.0% of employees of the Manager or related bodies corporate of the (inclusive of the impact of GST, including anticipated RITCs, on the Manager, rebate or waive application fees, purchase fees, Fund) of the application money in respect of each application to be redemption fees or transfer fees. However, the Manager may only do issued Units that the Manager accepts. The GST inclusive fee is this if the number of votes that may be cast on a resolution of payable out of the Fund immediately after the Units are issued. Unitholders by employee Unitholders and Unitholders that are related bodies corporate of the Manager, is no more than 5% of all votes When the Manager calculates the number of Units to be issued of Unitholders. pursuant to an application, the application fee is first deducted from the value of the application money. Any rebates negotiated with wholesale clients, employees or related bodies corporate of the Manager are payable by the Manager from the Manager’s own funds. 7.3 PURCHASE FEE Where the Manager holds Units that it acquired in connection with 7.5 ADVISER REMUNERATION the Liquidity Facility, an applicant’s application for Units under this PDS will be treated as an offer to purchase Units from the Manager. The Manager may pay commissions to advisers whose clients invest in Units either where new Units have been issued or existing Units A Unitholder who purchases Units from the Manager (where the have been purchased from the Manager. Any such commissions will Manager acquired the Units in connection with the Liquidity Facility) be paid by the Manager out of its own funds and will not represent will be charged a purchase fee of 4.0% (GST inclusive) of the an additional cost to the Fund or any Unitholder. These commissions purchase price for the Units. When the Manager calculates the do not include any other commissions or any fees and expenses that number of Units to be transferred to a Unitholder pursuant to an may be agreed between a Unitholder and their adviser. A Unitholder’s application in these circumstances, the purchase fee is first adviser should give the Unitholder details of their remuneration deducted from the value of the application money. arrangements. Assuming equivalent investments (and ignoring any input tax credits The Manager may pay an adviser a commission, in relation to a that may be available – see Section 2.13), a Unitholder who bears client of the adviser who invests in Units, within the following ranges: an application fee (being a Unitholder who is issued new Units by the Manager), will be in the same position as a Unitholder who is — 0-4% of the client’s application monies as an upfront payment; charged a purchase fee (being a Unitholder who is transferred or existing Units by the Manager which the Manager has acquired — 0-0.65% per annum of the value of the client’s investment as a pursuant to the Liquidity Facility) – that is, whether a Unitholder is trail commission. issued new Units or is transferred existing Units from the Manager will not impact on the Unitholder, other than as referred to in Alternatively, the Manager may pay advisers both an upfront Section 7.15. commission and a trail (in each case, the amount of the commission will be lower than the maximum commissions listed above). By completing and lodging an Application Form a Unitholder agrees that the Manager may charge the purchase fee in relation to the purchase of Units from the Manager.
34 Section 7 – Multiplex Development and Opportunity Fund In some circumstances, the Manager may negotiate with an adviser Facility. The percentage (GST inclusive) that would be applied to to pay the adviser a commission in excess of 4% of the client’s determine the amount of the Liquidity Facility administration fee will application money. In such circumstances, as with all commissions, be dependent on when the Units, the subject of the transfer, were the payment is borne out of the Manager’s own funds and does not issued (unless the Units are held through an IDPS or an IDPS-like represent a cost to the Fund or any Unitholder. scheme – as follows: — Units issued less than three years before the date of the 7.6 TRANSFER FEE transfer – 4%; The Manager is entitled to charge a transfer fee of $110 (GST — Units issued between three years and five years before the date inclusive) in respect of a transfer of Units. The transfer fee is payable of the transfer – 2%; by the purchaser. — Units issued greater than five years before the date of the The transfer fee does not apply in relation to transfers of Units: transfer – 0%; and — to the Manager in connection with the Liquidity Facility; — Units held through an IDPS or an IDPS-like scheme — from the Manager in respect of which a purchase fee is payable; – 1% (irrespective of when the Units, the subject of the transfer, or were issued). — that either: Units on issue as at 1 November 2004 will, so long as they are held by the relevant Unitholder as at 1 November 2004, be treated as – were issued before 1 November 2004 so long as they are having been on issue for greater than five years for the purposes of held by the relevant Unitholder as at 1 November 2004; or determining the Liquidity Facility administration fee (unless the Units – as at the date of the transfer, have been on issue for more are held through an IDPS or an IDPS-like scheme). than five years. By completing and lodging an Application Form a Unitholder agrees The Manager will not register a transfer until the transfer fee has that the Manager may charge the Liquidity Facility administration fee been paid to the Manager. in relation to a transfer of Units to the Manager in the circumstances described above. By completing and lodging an Application Form a Unitholder agrees that the Manager may charge the transfer fee in relation to a transfer The Manager may accept a lower fee or may defer payment for of Units and may charge an additional amount on account of GST in any period. relation to the supply to which the fee relates. 7.9 MANAGEMENT FEE The Manager may accept a lower fee or may defer payment for any period. The net effect on the Fund of the management fee is 1.5% per annum of the value of the assets of the Fund. The GST inclusive fee 7.7 REDEMPTION FEE is payable monthly in arrears and calculated on the value of the assets of the Fund as at the end of the calendar month. The Manager is entitled to charge a redemption fee of the greater of $110 (GST inclusive) or 1.0% of the redemption proceeds in relation 7.10 EXPENSES to a redemption of Units. The redemption fee is deducted from the redemption proceeds. All expenses incurred by the Manager in relation to the proper performance of its duties under the Constitution may be reimbursed The redemption fee does not apply in relation to a redemption of: out of the assets of the Fund, subject to the Corporations Act. There — Units that were issued before 1 November 2004 so long as they is no maximum imposed by the Constitution on the amount of are held by the relevant Unitholder as at 1 November 2004; properly incurred fees that the Manager may recover from the Fund. The Manager undertakes that it will cap the expenses it will recover — Units that have, as at the date of the redemption, been on issue at 0.3% of the Fund’s assets. for more than five years; or The expenses include the Custodian’s fees. — Units that are transferred to the Manager pursuant to the Liquidity Facility. 7.11 FEE CHANGES AND FEE MAXIMA Redemptions may only occur when the Fund is liquid. The Manager may charge the Fund a management fee of 1.65% By completing and lodging an Application Form a Unitholder agrees (inclusive of GST) per annum of the value of the assets of the Fund that the Manager may charge the redemption fee in relation to the as permitted under the Constitution. However, as at the date of this redemption of Units in the circumstances described above and may PDS, the Manager has decided to charge 1.5% (inclusive of GST and charge an additional amount on account of GST in relation to the anticipated RITCs). The Manager may charge an application fee of up supply to which the fee relates. to 4.4% (inclusive of GST) under the Constitution. However, as at the The Manager may accept a lower fee or may defer payment for date of this PDS, the Manager has decided to charge 4% (inclusive any period. of GST and anticipated RITCs). The Manager may only increase either the application fee above 4.4% (inclusive of GST) or the 7.8 LIQUIDITY FACILITY ADMINISTRATION FEE management fee above 1.65% (inclusive of GST) if the Constitution The Manager is entitled to charge a Liquidity Facility administration is amended to allow the Manager to charge a higher fee. This could fee of a percentage of the sale proceeds in relation to a transfer only be done if a special resolution (which must be passed by 75% of Units from a Unitholder to the Manager pursuant to the Liquidity of votes cast by Unitholders entitled to vote on the resolution) of
Product Disclosure Statement 35 FEES AND EXPENSES
Unitholders is passed approving the amendment at a meeting of Unitholders. The Manager could only charge a Unitholder a higher: — transfer fee; — redemption fee; or — Liquidity Facility administration fee if the Unitholder agrees to the higher fee. The Manager could only charge a Unitholder a higher purchase fee if the Manager was charging a higher application fee. There is no limit under the Constitution on the amount of properly incurred expenses that the Manager may recover from the Fund. However, the Manager has agreed to cap these expenses paid by the Fund at 0.3% per annum of the value of the Fund assets.
7.12 BUY AND SELL SPREAD No buy/sell spread will be applied on the issue or redemption of Units in the Fund.
7.13 UNDERSTANDING THE IMPACT OF FEES AND CHARGES OVER TIME The Australian Securities and Investments Commission (ASIC) has on its website www.asic.gov.au a fee calculator which has been designed to help investors understand the impact of fees and charges over time.
36 Section 7 – Multiplex Development and Opportunity Fund 7.14 DOLLAR EXAMPLES 7.15 GOODS AND SERVICES TAX (GST) The table below sets out dollar examples which are inclusive of GST The Fund or a Unitholder may be required to pay GST on certain fees in relation to the redemption fee, the transfer fee, the purchase fee and expenses. However, where available, the Fund will claim RITCs and the Liquidity Facility administration fee, and inclusive of the for the GST incurred by the Fund. impact of GST (including anticipated RITCs) on the Fund in relation to Although the GST inclusive application fee is paid by the Fund to the the application fee and the management fee. Manager, it is effectively borne by the applicant (this is because the ($) Manager, when it calculates the number of Units to be issued pursuant to the application, first deducts the application fee from the Application fee/purchase fee value of the application money). However, the Fund in determining Amount invested 10,000 the amount to be deducted from the application monies will take into account the benefit of any anticipated RITCs which may arise for the Application fee amount 400 Fund in respect of the GST on the fee. 4% of application monies By contrast, an applicant who is transferred units from the Manager Purchase fee amount 400 pays to the Manager the purchase fee grossed up for GST. 4% of application monies The applicant should seek professional tax advice as to whether or Redemption fee/Liquidity Facility administration fee not it is eligible to receive RITCs in respect of the GST on the purchase fee. Amount withdrawn 10,000 Redemption fee amount 110 (greater of 1% of redemption proceeds or $110) Liquidity Facility administration fee amount (percentage of sale proceeds) 4% 400 2% 200 1% 100 0% 0
Transfer fee Amount transferred 10,000 Transfer fee amount 110
Management fee and expenses Value of investment 10,000 Management fee amount 150 1.5% of value of the Fund’s assets (per annum) Expense recoveries 30 0.3% of value of the Fund’s assets (per annum)
Product Disclosure Statement 37 SECTION ADDITIONAL8 INFORMATION
38 Section 8 – Multiplex Development and Opportunity Fund ADDITIONAL INFORMATION
8.1 THE MANAGER Compliance Committee The powers and duties of the Manager are set out in the The Manager has established a Compliance Committee which Constitution, the Corporations Act and the general law. The duties of includes a majority of external members. The role of the Compliance the Manager under the Corporations Act include: Committee includes: — acting honestly; — monitoring the Manager’s compliance with the Compliance Plan; — acting in the best interests of Unitholders and, if there is a — reporting to ASIC, if the Compliance Committee takes the view conflict between the Unitholders’ interests and those of the that the Manager has not taken or does not propose to take, Manager, giving priority to Unitholder interests; appropriate action to deal with breaches reported to the Manager; and — ensuring that the Fund’s assets are clearly identified as Fund assets and held separately from assets of the Manager and — assessing the adequacy of the Compliance Plan and assets of any other fund and are valued at regular intervals; recommending any changes to the Manager. — ensuring the payments out of Fund assets are made in Compliance Plan accordance with the Constitution and the Corporations Act; and The Manager has adopted a Compliance Plan for the Fund which — reporting within five Business Days to ASIC any breach, or likely sets out the policies and procedures that ensure management breach, of the Corporations Act in relation to the Fund or the objectives are carried out and in accordance with the Corporations Manager’s Australian Financial Services licence which is Act and the Constitution. The Manager has appointed a Multiplex significant (according to the meaning of that term in the employee as compliance officer who is responsible for performing Corporations Act) or has had or is likely to have a materially periodic reviews of the Manager’s compliance with the provisions adverse effect on the interests of Unitholders. of the Compliance Plan. Each year the Compliance Plan is independently audited and the audit report is lodged with ASIC. 8.2 RETIREMENT OF MANAGER Financial reporting The Manager may retire as the responsible entity of the Fund by There is a comprehensive budgeting system in place in relation to calling a meeting of Unitholders to explain why the Manager wishes each investment made by the Fund. Monthly actual results are to retire and to enable Unitholders to choose a replacement reported against budget and revised forecasts for the year are responsible entity by voting on an extraordinary resolution. The prepared regularly. Manager could apply for conditional ASIC relief from the requirement to hold a meeting of members (conditions could include giving each Conflicts of interest Unitholder the right to ask for a vote on the proposed replacement of In accordance with the Corporations Act and the Constitution, the Manager with another entity within Multiplex). The Manager may directors must keep the Manager advised, on an ongoing basis, of also be removed from office by an extraordinary resolution passed at any interest that could potentially conflict with those of the Manager. a meeting of Unitholders. Where the Board believes that a significant conflict exists, the director concerned will not be present whilst the item is considered 8.3 RIGHTS AND OBLIGATIONS OF UNITHOLDERS at a Board meeting and will not cast a vote on the matter. The rights of Unitholders will be governed by the Constitution and the Corporations Act. The Constitution provides that the liability of each 8.5 CONFIRMATION OF INVESTMENT Unitholder is limited to its investment in the Fund and any The Manager will provide Unitholders with a written statement undistributed income. A Unitholder is not required, under the setting out the details of their investment, including the date, the Constitution, to indemnify the Manager or a creditor of the Manager number of Units issued, the amount paid and any other costs. Unit against any liability of the Manager (except for liabilities for tax or certificates will not be issued. Units will, in general, be issued on the user pays fees in relation to the Unitholder). However, the Manager is first Business Day of each month and will participate in distributions unable to assure Unitholders that their liability will be limited in the on a pro rata basis from the date of issue. manner provided by the Constitution, because the liability of Unitholders is ultimately to be determined by the courts. 8.6 COOLING-OFF RIGHTS 8.4 CORPORATE GOVERNANCE In the event the Fund is illiquid at the time Units are issued, cooling-off rights will not apply to the relevant applicants. The Fund Responsible entity is illiquid as at the date of this PDS. The Manager is responsible for the overall governance of the Fund, If the Fund is liquid at the time an investor (who is a “retail client” as including the protection of Unitholder interests, developing strategic that term is defined in section 761G of the Corporations Act) is direction, establishing goals for management and monitoring the issued Units, the investor will have cooling-off rights in relation to achievement of these goals. their Units. Those rights entitle such an investor to a 14 day Board composition cooling-off period commencing on the earlier of: The Board meets on a regular basis and discusses pertinent — the date the investor receives confirmation of their investment; or business developments and issues and reviews the operations and — five days after the date on which the issue of Units as per the performance of the Fund. There is an equal number of executive and relevant application occurs. non-executive members of the Board.
Product Disclosure Statement 39 ADDITIONAL INFORMATION
If, during this 14 day period, an investor decides that they no longer arrangements governing the IDPS. A person who invests in the Fund wish to invest in the Fund, they should notify the Manager in writing through an IDPS should ignore information in this PDS that is (including their signature) by mail or fax. relevant only for direct investors. This includes information relating to: Upon receipt of such notification within the 14 day period, the Manager will refund the investment and return the invested funds. Application Form In accordance with the Corporations Act, the amount refunded will A person investing in the Fund through an IDPS should not complete be adjusted to account for any increase or decrease in the Unit price the Application Form attached to or accompanied by this PDS. from the time the Units were issued to the time the Manager An indirect investor should complete the application form supplied by receives a request to cancel the investment, as well as any tax or the operator of the IDPS. duty paid or payable. Investors may also be charged an amount to account for reasonable administrative costs incurred by the Manager Information in relation to the acquisition and termination of an investment. An indirect investor will not receive any statements, tax information Please note that these cooling-off rights do not apply when an or other information directly from the Fund. An indirect investor investor chooses to exercise rights or powers as a Unitholder in the should receive equivalent information from the operator of the IDPS. Fund during the 14 days. Redemption/Withdrawals Please refer to the Manager’s website for information as to whether Provisions which relate to redemptions and withdrawals will affect the Fund is liquid or illiquid and whether cooling-off rights will apply. the operator of the IDPS and not the indirect investor. 8.7 COMPLAINTS Fees and expenses The Constitution contains procedures for the handling of complaints Fees and expenses applicable to the IDPS (and set out in the IDPS from Unitholders. If a Unitholder has a complaint they should write or offer document or client agreement) are payable in addition to the call the Manager’s Complaints Officer. fees and expenses stated in this PDS. The Complaints Officer 8.9 STATEMENT REGARDING LABOUR STANDARDS AND Multiplex Development and Opportunity Fund ENVIRONMENTAL, SOCIAL AND ETHICAL CONSIDERATIONS Level 4 1 Kent Street The Manager does not, in the context of making decisions relating to Sydney NSW 2000 the Fund, take into account labour standards or environmental, social Phone (02) 9256 5700 or ethical considerations, except to the extent that the Manager considers these issues have the potential to materially impact on the In the event that a Unitholder is not satisfied with the outcome of a merits of its decisions in relation to the Fund. This means that if the complaint, the Unitholder has the right to refer the matter to an sustainability or value of the Fund is adversely affected due to external complaints resolution scheme. The Manager is a member of unacceptable labour standards or environmental, social or ethical the Financial Industry Complaints Service Limited (FICS). A Unitholder factors, the Manager may choose not to invest further or to dispose can contact FICS on telephone 1300 780 808 (within Australia), by of the investment. facsimile on (03) 9621 2291 or by writing to PO Box 579, Collins Street West, Melbourne Victoria 8007. ASIC also has a toll free infoline on 1300 300 630 which Unitholders may use to complain 8.10 REPORTING or obtain information. Distribution statements
8.8 INVESTMENT THROUGH AN INVESTOR DIRECTED Each Unitholder will receive a quarterly distribution advice setting out PORTFOLIO SERVICE their income distribution entitlements. Distributions will be paid directly into a nominated bank, building society or credit union A person may invest indirectly in the Fund through an administration account generally within six weeks from the end of the relevant service or an investor directed portfolio service (IDPS) such as a distribution period. Distributions will not be paid by cheque. master fund or wrap account, or a nominee or a custody service, by directing the trustee or operator of the IDPS to acquire Units on their Annual and half-yearly report behalf. Investors in an IDPS, master fund or wrap account, or a Following the end of each financial year and half-year, Unitholders nominee or custody service may rely upon and are authorised to use will receive an annual and half-year report, including financial the information contained in this PDS for the purpose of inviting and statements for the Fund. giving a direction to a trustee or operator of an IDPS, master fund, wrap account, or a nominee or custody service to invest in the Fund Annual taxation information on their behalf. Unitholders will receive an annual taxation statement and taxation A person who invests through an IDPS should consult the operator of guide for each financial year ending 30 June that will assist the IDPS as to any cooling-off rights, if any, they may have. Unitholders when completing an Australian income tax return. An indirect investor does not become a Unitholder in the Fund. Continuous disclosure Accordingly, they do not acquire the rights of a Unitholder of the The Fund is a disclosing entity and is therefore subject to regular Fund or acquire any direct interest in the Fund. The operator or reporting and disclosure obligations. In particular, annual financial manager of the IDPS acquires these rights and can exercise, or reports, half-year financial reports and any continuous disclosure decline to exercise them, on behalf of the investor according to the notices must be lodged by the Manager with ASIC. Copies of
40 Section 8 – Multiplex Development and Opportunity Fund documents lodged with ASIC may be obtained from or inspected at For a true and fair view to be presented under A-IFRS a complete set an ASIC office. A Unitholder may ask the Manager for a copy of: of financial statements and notes, together with comparative balances is required. As this note provides only a summary, further (i) the annual financial report most recently lodged with ASIC by disclosure and explanations will be required in the first complete the Fund; A-IFRS financial report. (ii) any half-year financial reports lodged with ASIC by the Fund; and — Financial Instruments Reporting Classification: Under the (iii) any continuous disclosure notices lodged with ASIC by the Fund, definitions within AASB 132 Financial Instruments: Disclosure and Presentation Units held in the Fund are likely to be reported and copies will be provided by the Manager free of charge within as long term debt rather than equity in the Statement of Financial five days after receiving the request. Position of the Fund, and corresponding distributions to International Financial Reporting Standards Unitholders will be reported as interest expense in the Statement of Financial Performance. The reporting classifications do not For reporting periods beginning on or after 1 January 2005 the Fund alter the underlying economic interest of Unitholders in the must comply with the Australian equivalents of International Financial reported net assets and profits of the Trust. Reporting Standards (A-IFRS) as issued by the Australian Accounting Standards Board. — Tax effect accounting: Accounting for income tax uses a balance sheet approach to calculate deferred tax balances (currently The Fund will report for the first time in compliance with A-IFRS income statement method). The amount of deferred tax balances when the results for the half-year ending 31 December 2005 (assets and liabilities) may change. are released. — Classification of financial assets and liabilities: Under A-IFRS The opening A-IFRS balannce sheet for the Fund is a restated financial assets and liabilities will be required to be classified into balance sheet dated 1 July 2004. Most adjustments required on specific categories which will, in turn, determine the accounting transition to A-IFRS are made retrospectively, against opening treatment of the item. Currently, the investments held by the retained earnings on 1 July 2004. Fund are recorded at fair value and this is expected to remain As emerging accepted practice in the interpretation and application the case under A-IFRS. of A-IFRS and UIG interpretations continues, producing some uncertainty about their treatment as currently adopted, the 8.11 CONSTITUTION disclosures detailed in this note should not be considered to provide complete guidance as to the changes in accounting policies that will The Constitution is dated 1 March 2002 and has been lodged with result from the transition from Australian GAAP (A-GAAP) to A-IFRS ASIC. It governs the rights and obligations of Unitholders. from 1 July 2005. The Constitution covers details relating to the fees of the Manager, certain rights of the Unitholders and the Manager’s duties The Multiplex Group board has established a formal implementation and powers. project, including the establishment of a project team (the team) to manage the transition to A-IFRS. The team reports quarterly to the The Manager cannot amend the Constitution without Unitholders Audit and Risk Committee, and is led by senior finance personnel approving such amendments by special resolution, unless the who, working with specialist external consultants and monitored by a Manager reasonably believes that such amendments will not steering committee, have identified changes to accounting policies, adversely affect the rights of the Unitholders. quantified likely key impacts and is currently finalising detailed The Constitution includes provisions dealing with: design, implementation and system amendments. — investments of the Fund and valuation principles for assets; Impact of Transition to A-IFRS — the distribution of income and capital; The impact of the transition to A-IFRS, including the transitional adjustments disclosed, is based on A-IFRS standards that — the obligations, duties and powers of the Manager and management expect to be in place, when preparing the first delegation of its functions; complete A-IFRS financial report for the half-year ending — the duration of the Fund including termination; 31 December 2005. — recoverable expenses, permitted borrowings and the limitation of The differences between current A-GAAP and A-IFRS identified to liability; date as potentially having a significant effect on the financial position and financial performance of the Fund are summarised below, — remuneration and indemnification of the Manager as the being management’s best estimates of the quantitative impact of responsible entity; and the changes as at the date of preparing the 30 June 2005 — procedures for the convening and holding of meetings of financial report. Unitholders. Where the application or interpretation of an accounting standard is Some of the rights and liabilities attaching to Units are currently being debated, the accounting policy adopted reflects the summarised below: current assessment of management of the likely outcome of those deliberations. As accepted accounting practices continue to develop Voting rights the final reconciliations presented in the first financial report At a meeting, on a show of hands, each Unitholder present in person prepared in accordance with A-IFRS may vary materially from the or by proxy shall have one vote. On a poll, each Unitholder will be reconciliations provided in this note. entitled to one vote for each Unit held.
Product Disclosure Statement 41 ADDITIONAL INFORMATION
Unitholder meeting — to keep Unitholders informed of future investment opportunities, products and services of a similar type. The Manager may at any time summon a meeting of Unitholders for such purpose as it sees fit. On the requisition in writing of at least If Unitholders do not provide the information requested on the 100 Unitholders or Unitholders holding at least 5% of the Units, the Application Form, the Manager may not be able to process or accept Manager will convene a meeting of Unitholders. applications. Personal information will be shared with Registries to maintain Unitholdings and may be disclosed to other entities within Rights on winding up Multiplex, but only for the above purposes. The Manager may use On a winding up, the net proceeds of realisation of the assets of the the information collected on the Application Form to inform Fund, after discharging or providing for all liabilities of the Fund, Unitholders of future investment opportunities offered by Multiplex. must be distributed pro rata to Unitholders according to their If Unitholders do not wish to receive information on future Multiplex Unit holdings. investment opportunities or products, please indicate the election in part 12 of the Application Form. Transfer of Units Personal information may also be disclosed to any financial A Unitholder may only transfer Units in such a manner as the institution nominated by Unitholders and maybe disclosed to a Manager may prescribe from time to time. Unitholder’s licensed financial adviser. If Units are purchased through Rounding an adviser or a broker, by signing the Application Form a Unitholder authorises the Manager to disclose to the adviser or broker noted or Where any calculation performed under the terms of the Constitution whose stamp appears on the Application Form, information relating results in the issue or redemption of a fraction of one Unit, that to the application for Units. This authorisation specifically excludes fraction may be rounded down or up to such number of decimal the disclosure of any tax file numbers or any information in relating places as the Manager determines. to them. This authority will continue unless revoked by a Unitholder in writing. 8.12 CUSTODIAN If obliged to do so by law, the Manager will provide a Unitholder’s As at the date of this PDS Multiplex Funds Management Limited, a personal information to other parties strictly in accordance with the wholly owned subsidiary of Multiplex, is the Custodian of the Fund. relevant legal requirements. The role of the Custodian is to hold assets of the Fund and to deal with these assets only as instructed by the Manager in accordance 8.14 DETAILS OF THE DISTRIBUTION REINVESTMENT PLAN with the provisions of the Compliance Plan and Constitution, the Corporations Act and the agreement between the Manager and the To enable Unitholders to invest cash distributions in new Units, a Custodian. The Custodian is not a trustee appointed to protect the Distribution Reinvestment Plan (Plan) has been established by the interests of Unitholders. Responsible Entity. Multiplex Funds Management Limited also acts as custodian for the The principal features of the Plan are summarised as follows: Multiplex New Zealand Property Fund and is the responsible entity of — at each distribution payment date, the cash distribution in the Multiplex Property Trust. relation to the Units participating in the Plan is automatically reinvested in the acquisition of new Units in the Fund; 8.13 PRIVACY — participation in the Plan in respect of distributions may only be The Manager is committed to managing personal information in in relation to the full distribution. It is not possible to elect to a way that complies with the principles outlined in the Privacy participate in relation to part of a distribution only; Amendment (Private Sector) Act 2000 and using any personal information provided in the attached application in a way that — all Units allotted under the Plan are allotted at an issue price respects the privacy of Unitholders. which is determined in accordance with the requirements of the Constitution; By completing the attached Application Form, applicants are providing personal information to the Manager through Registries, — participants pay no fee, commission or other transaction costs on who has been contracted by the Manager to manage the the new Units acquired under the Plan. On issue, the Units rank applications for Units. equally with the then existing Units in the Fund; and The Manager will use personal information only for the — participants may join or withdraw from the Plan at any time as following purposes: provided under the rules of the Plan. — to evaluate applications; To join the Plan, applicants must complete part 11 of the Application Form. — to issue Units; — to communicate with Unitholders in relation to their Unitholdings and all transactions relating to Unitholdings; — to advise Unitholders of their quarterly distribution income entitlements; — to report in relation to a Unitholder’s investment in the Fund including annual and half-yearly reports, annual taxation information and other information; and
42 Section 8 – Multiplex Development and Opportunity Fund SECTION GLOSSARY9
Product Disclosure Statement 43 GLOSSARY
Application Form NAV The application form attached to or accompanying this PDS. Net asset value, as defined in clause 26 of the Constitution, being ASIC the value of the Fund’s assets less its liabilities. Australian Securities and Investments Commission. Non-Multiplex Development(s) Board Development(s) in which the Fund invests that are not Multiplex The board of directors of the Manager. Developments but where a member of the Multiplex Group has some participation, for example, as owner of 25%, builder only, facilities Business Day management only, project management only. A day that banks are open in New South Wales. Offer Compliance Committee The offer of Units under this PDS. The committee established by the Manager and described in Section 8.4. PDS This product disclosure statement. Compliance Plan Compliance plan for the Fund including any modifications to Registries the plan. Registries (Victoria) Pty Ltd (ACN 110 851 333), being the company appointed by the Manager to manage the register of Unitholders. Constitution Constitution for the Fund including any supplementary or RITCs replacement constitutions. Reduced input tax credits. Corporations Act Section Corporations Act 2001 (Cwlth). A section of this PDS. Custodian Unit The custodian of the Fund which, at the date of this PDS, is Multiplex A unit in the Fund. Funds Management Limited, a wholly owned subsidiary of Multiplex. Unitholder Fund A person or entity that holds Units. Multiplex Development and Opportunity Fund (ARSN 100 563 488), including, where appropriate, its wholly owned entities. GST Goods and Services Tax. Liquidity Facility A facility, capped at $20 million, under which the Manager (or another Multiplex subsidiary with an appropriate Australian financial services licence) purchases Units from Unitholders wishing to exit the Fund. Manager Multiplex Investments Limited (ACN 096 295 233), the responsible entity of the Fund which holds Australian Financial Services licence number 241178. MER Management expense ratio. Multiplex Multiplex Limited (ACN 008 687 063) or one of its wholly owned subsidiaries or a fund of which a wholly owned subsidiary is the responsible entity. Multiplex Development(s) Development(s) in which the Fund invests and the Multiplex Group has a significant interest such as, for example, developments in which the Multiplex Group owns a 50% interest in either the development or the developer entity. Multiplex Group Multiplex Limited, Multiplex Property Trust and all other entities controlled by each of them. Multiplex Limited Multiplex Limited (ACN 008 687 063). Multiplex Property Trust Multiplex Property Trust (ARSN 106 643 387).
44 Section 9 – Multiplex Development and Opportunity Fund SECTION HOW10 TO INVEST
Product Disclosure Statement 45 HOW TO INVEST
Applications must be made on the Application Form attached to or may be withheld from some or all of your distribution if you accompanying this PDS. choose not to supply this information. This will not affect your application form. Successful applicants will either be issued with new Units or will acquire existing Units held by the Manager in its personal capacity. 6. Insert your date of birth. In either case, Units will generally be issued or transferred at a price 7. Complete cheque details as requested. Make your cheque equal to NAV divided by the number of Units on issue on the first payable to “MDOF Application Account”, cross it and mark it Business Day of the next month after the application is received “Not Negotiable”. Cheques must be made in Australian currency, (provided the Manager accepts the application). The Manager may, and cheques must be drawn on an Australian bank or building at its discretion, issue Units at other times. society. Before completing the Application Form you should read this 8. Enter your contact details so we may, if necessary, contact you PDS carefully. regarding your Application Form or application monies. Please complete all relevant sections of the appropriate Application 9. Enter your email address so we may, if necessary, contact you Form using BLOCK LETTERS. regarding your Application Form or application monies or other These instructions are cross-referenced to each section of the correspondence. Application Form. 10. Distributions will be paid by direct electronic payment into your 1. If you have previously invested into a Multiplex fund please nominated bank, building society or credit union account. Full provide your existing investor number/s in any Multiplex fund. details of your account and BSB numbers must be provided along with a copy of a blank deposit slip to ensure the accuracy 2. Enter the $ amount of your application. of the details provided. 3. Write your full name or the full company name. Initials are not 11. Advise whether you would like to participate in the distribution acceptable for first names. reinvestment plan - see Section 8.14. 4. Enter your postal address for all correspondence. 12. Please advise if you would not like to receive information about All communications to you from the Fund will be mailed to the other Multiplex Capital products or services. person(s) and address as shown. For joint applicants, only one address can be entered. 13. Sign and date the declaration. 5. Enter your Australian Tax File Number (TFN) or, where relevant, 14. Advisers/Brokers are requested to complete their details and Australian Business Number (ABN) or exemption category, if you stamp the Application Form. are an Australian resident. You are not obliged to supply your TFN (or, where relevant, an ABN) or claim an exemption, but tax
Note that ONLY legal entities can hold the Units. The application must be in the name of a natural person(s), companies or other legal entities acceptable to the Manager. At least one full name and surname is required for each natural person. Examples of the correct form of registrable title are set out below: Type of Investor Correct Form Incorrect Form Trusts Mr John David Smith John Smith Family Trust
LODGMENT: Mail your completed Application Form with cheque(s) attached in accordance with instructions from your financial adviser or to the following address: Delivery: Postal: Multiplex Development and Opportunity Fund Multiplex Development and Opportunity Fund C/– Registries C/– Registries Level 2 PO Box R67 28 Margaret Street Royal Exchange Sydney NSW 2000 Sydney NSW 1223
If you have any questions as to how to complete the Application Form, please call Registries on 1800 766 011.
46 Section 10 – Multiplex Development and Opportunity Fund AppForm_D5 14/9/05 10:53 AM Page 1
Pin cheque(s) here. Do not staple.
MULTIPLEX DEVELOPMENT AND OPPORTUNITY FUND Responsible Entity and Manager: Multiplex Investments Limited (AFSL number 241178) APPLICATION FORM Fill out this Application Form if you wish to apply for Units in the Fund. • Please read the PDS. • Follow the instructions to complete this Application Form in Section 10. • Print clearly in capital letters using black or blue pen.
Investor Number (if any) – Provide details of existing investor numbers in any Multiplex Capital funds 1
Total amount applied for in Australian dollars
2 Minimum of $10,000 to be applied for, and thereafter in $1,000 increments.
Write the name(s) you wish to register the Units in Applicant 1 3 Name of Applicant 2 or
Name of Applicant 3 or
Write your postal address here Number/Street 4
Suburb/Town State Postcode
Enter your TFN, ABN or Exemption Category Applicant #1 Applicant #2 5 Applicant #3
Date of birth Applicant #1 Applicant #2 Applicant #3 6 / / / / / /
Cheque payment details Please enter details of the cheque(s) that accompany this application. Cheques are to be crossed Not Negotiable and made payable to: MDOF Application Account 7 Name of drawer of cheque Cheque No. BSB No. Account No. Cheque Amount A$
Contact telephone number (daytime, work or mobile) Email address 89
Direct Credit of Distributions To ensure the correct details are recorded, please attach a blank deposit slip of your nominated account.
10 Name of Financial Institution Branch
BSB Number (6 digits) (maximum 9 digits) Account Number
Account Name(s) AppForm_D5 14/9/05 10:53 AM Page 2
DIVIDEND REINVESTMENT PLAN 11 Please tick if you would like the Manager to reinvest your distributions to aquire additional Units.
12 Please tick if you do not wish to receive information about other Multiplex Capital products or services?
DECLARATION 13 I/We acknowledge and agree by submitting and signing this Application Form for an application for Units in the Fund that: – I/we personally received the PDS accompanied by or attached to this Application Form and have read the PDS to which this Application Form relates; – I/we agree to be bound by the Constitution of the Fund; – I/we acknowledge and agree that the Manager may charge a redemption fee, a transfer fee, a Liquidity Facility administration fee and a purchase fee as set out in Section 7; – I/we cannot withdraw my/our application except when I/we have such a right under the Corporations Act or if the Manager consents; – I/we acknowledge that acceptance of my/our application and allocation or transfer of Units will be at the sole discretion of the Manager and that the Manager has the right to reject my/our application or to allocate or transfer to me/us a lower number of Units than applied for; – I/we acknowledge that the information contained in the PDS is not personal financial product advice or a recommendation that Units in the Fund are suitable for me/us, given my/our investment objectives, financial situation and particular needs; – by lodging this Application Form, I/we declare that this form is completed and lodged according to the PDS and that all statements made by me/us are complete and accurate. I/We represent that by lodging this Application Form, I am/we are in compliance with all laws of any jurisdiction outside the Commonwealth of Australia relevant to this application; – if I am/we are an individual(s), that I am/we are over 18 years of age; – I/we acknowledge that investing in property developments is risky and I/we might lose all of the money I/we invest in the Fund; – neither the performance of the Manager nor any particular return from, or any return of capital invested in, Units of the Fund is guaranteed by Multiplex any of its related bodies corporate or its associates (other than as set out in Section 2.9); – my/our investment in Units in the Fund is subject to investment risks, including possible delays in repayment and loss of income and capital invested; – applications will only be accepted in Australian dollars; – any income and capital distributions made by the Fund will only be paid in Australian dollars; – if this Application Form is signed under power of attorney, the attorney declares that he/she has not received notice of revocation of that power (a certified copy of the power of attorney should be submitted with this Application Form); – I/we have read the pages of the PDS containing the information under the heading Privacy in Section 8.13 and I am/we are aware that until I/we inform the Manager otherwise, I/we will be taken to have consented to all the uses of my/our personal information (including marketing) contained in that Section; – Units may either be, at the sole discretion of the Manager, issued or transferred to me/us pursuant to this application. If you have any queries concerning your application, please call Registries on 1800 766 011. The distribution of this PDS in jurisdictions outside Australia may be restricted by law and applicants should seek advice on and observe any such restrictions.
Signature of Applicant #1 or Sole Director and Signature of Applicant #2 or Signature of Applicant #3 or Director Sole Company Secretary Director/Company Secretary
Date – Day Month Year / /
Adviser (complete if applicable) 14 Only licensed investment advisers, stock brokers and other approved persons are entitled to receive commission. Please remit any entitlement to commission or trail fee to: Dealer Stamp and Adviser’s Name Adviser’s Email/Telephone/Facsimile E –
T –
Adviser’s address F –
Commission Rebate 4% commission to client.
Yes (client receives additional Units) No (please complete preferred commission option below)
OR Tick preferred commission option. If no box ticked, 4% paid to adviser.
4% 2% + 0.35% trail 0.65% trail
Adviser’s signature AppForm_D5 14/9/05 10:53 AM Page 3
Pin cheque(s) here. Do not staple.
MULTIPLEX DEVELOPMENT AND OPPORTUNITY FUND Responsible Entity and Manager: Multiplex Investments Limited (AFSL number 241178) APPLICATION FORM Fill out this Application Form if you wish to apply for Units in the Fund. • Please read the PDS. • Follow the instructions to complete this Application Form in Section 10. • Print clearly in capital letters using black or blue pen.
Investor Number (if any) – Provide details of existing investor numbers in any Multiplex Capital funds 1
Total amount applied for in Australian dollars
2 Minimum of $10,000 to be applied for, and thereafter in $1,000 increments.
Write the name(s) you wish to register the Units in Applicant 1 3 Name of Applicant 2 or
Name of Applicant 3 or
Write your postal address here Number/Street 4
Suburb/Town State Postcode
Enter your TFN, ABN or Exemption Category Applicant #1 Applicant #2 5 Applicant #3
Date of birth Applicant #1 Applicant #2 Applicant #3 6 / / / / / /
Cheque payment details Please enter details of the cheque(s) that accompany this application. Cheques are to be crossed Not Negotiable and made payable to: MDOF Application Account 7 Name of drawer of cheque Cheque No. BSB No. Account No. Cheque Amount A$
Contact telephone number (daytime, work or mobile) Email address 89
Direct Credit of Distributions To ensure the correct details are recorded, please attach a blank deposit slip of your nominated account.
10 Name of Financial Institution Branch
BSB Number (6 digits) (maximum 9 digits) Account Number
Account Name(s) AppForm_D5 14/9/05 10:53 AM Page 4
DIVIDEND REINVESTMENT PLAN 11 Please tick if you would like the Manager to reinvest your distributions to aquire additional Units.
12 Please tick if you do not wish to receive information about other Multiplex Capital products or services?
DECLARATION 13 I/We acknowledge and agree by submitting and signing this Application Form for an application for Units in the Fund that: – I/we personally received the PDS accompanied by or attached to this Application Form and have read the PDS to which this Application Form relates; – I/we agree to be bound by the Constitution of the Fund; – I/we acknowledge and agree that the Manager may charge a redemption fee, a transfer fee, a Liquidity Facility administration fee and a purchase fee as set out in Section 7; – I/we cannot withdraw my/our application except when I/we have such a right under the Corporations Act or if the Manager consents; – I/we acknowledge that acceptance of my/our application and allocation or transfer of Units will be at the sole discretion of the Manager and that the Manager has the right to reject my/our application or to allocate or transfer to me/us a lower number of Units than applied for; – I/we acknowledge that the information contained in the PDS is not personal financial product advice or a recommendation that Units in the Fund are suitable for me/us, given my/our investment objectives, financial situation and particular needs; – by lodging this Application Form, I/we declare that this form is completed and lodged according to the PDS and that all statements made by me/us are complete and accurate. I/We represent that by lodging this Application Form, I am/we are in compliance with all laws of any jurisdiction outside the Commonwealth of Australia relevant to this application; – if I am/we are an individual(s), that I am/we are over 18 years of age; – I/we acknowledge that investing in property developments is risky and I/we might lose all of the money I/we invest in the Fund; – neither the performance of the Manager nor any particular return from, or any return of capital invested in, Units of the Fund is guaranteed by Multiplex any of its related bodies corporate or its associates (other than as set out in Section 2.9); – my/our investment in Units in the Fund is subject to investment risks, including possible delays in repayment and loss of income and capital invested; – applications will only be accepted in Australian dollars; – any income and capital distributions made by the Fund will only be paid in Australian dollars; – if this Application Form is signed under power of attorney, the attorney declares that he/she has not received notice of revocation of that power (a certified copy of the power of attorney should be submitted with this Application Form); – I/we have read the pages of the PDS containing the information under the heading Privacy in Section 8.13 and I am/we are aware that until I/we inform the Manager otherwise, I/we will be taken to have consented to all the uses of my/our personal information (including marketing) contained in that Section; – Units may either be, at the sole discretion of the Manager, issued or transferred to me/us pursuant to this application. If you have any queries concerning your application, please call Registries on 1800 766 011. The distribution of this PDS in jurisdictions outside Australia may be restricted by law and applicants should seek advice on and observe any such restrictions.
Signature of Applicant #1 or Sole Director and Signature of Applicant #2 or Signature of Applicant #3 or Director Sole Company Secretary Director/Company Secretary
Date – Day Month Year / /
Adviser (complete if applicable) 14 Only licensed investment advisers, stock brokers and other approved persons are entitled to receive commission. Please remit any entitlement to commission or trail fee to: Dealer Stamp and Adviser’s Name Adviser’s Email/Telephone/Facsimile E –
T –
Adviser’s address F –
Commission Rebate 4% commission to client.
Yes (client receives additional Units) No (please complete preferred commission option below)
OR Tick preferred commission option. If no box ticked, 4% paid to adviser.
4% 2% + 0.35% trail 0.65% trail
Adviser’s signature DIRECTORY
FUND LEGAL ADVISER Multiplex Development and Opportunity Fund Mallesons Stephen Jaques (ARSN 100 563 488) Level 60 Governor Phillip Tower RESPONSIBLE ENTITY AND MANAGER 1 Farrer Place Sydney NSW 2000 Multiplex Investments Limited (ACN 096 295 233) AUDITOR Level 4 1 Kent Street Ernst & Young Sydney NSW 2000 321 Kent Street Sydney NSW 2000 DIRECTORS REGISTRY Andrew Roberts Ian O’Toole Registries (Victoria) Pty Ltd Robert Rayner (ACN 110 851 333) Dr Peter Morris Level 11 Robert McCuaig CGU Tower Mike Hodgetts 485 La Trobe Street Melbourne VIC 3000 CUSTODIAN Multiplex Funds Management Limited (ACN 105 371 917) Level 4 1 Kent Street Sydney NSW 2000
CONTACT DETAILS Advisers (02) 9256 5700 Investors 1800 766 011 ssociates.com.au IDEA www.multiplexcapital.biz